This is without a doubt going to be one of those “preach what I don’t practice” posts, because I’m absolutely horrible at keeping receipts and just record keeping in general. So this post is not only to help you, but it’s to help me get my organizational skills in shape as well. It’s a well-known fact that we’re supposed to hang on to our receipts and other financial information, but for how long, exactly? And what’s the most efficient way to store these receipts?

First, we need to figure out how long to keep all sorts of records for. Feel free to adjust these figures for your own personal circumstances (though I would make sure that you’re keeping the tax and tax-related forms for at least as long as I recommend).

Keep for a month: ATM receipts, bank receipts, general small non-warranty purchases.
Keep for a year: Bank and credit card statements (your bank can print these off for you again if you ever need them), paycheck stubs, bills
Keep for 3 years: Warranty receipts (or longer if the warranty is longer than 3 years)
Keep for 7 years: T4s and other tax-related forms
Keep forever: Your copy of your tax returns, home improvement and home purchase-related records, large purchase receipts

Now that you know how to keep them, the question becomes where? FrugalTrader had a great post a few weeks ago about storing information for tax purposes. Well, expanding on the concept of the filing cabinet, you can keep your records extremely organized with even a relatively simple furniture set. Take for example the following simple drawer set from IKEA:

In the first drawer, you should be keeping your receipts, statements, pay stubs and bills. At the end of the month, shred the receipts (if you don’t choose to keep them longer) and put the rest of the items in an envelope. Separate your warranty receipts as well as any tax related forms in their own separate envelopes Label them, and put everything except the tax forms in the second drawer. Your second drawer should then contain everything you keep for 1 year and everything you keep for three years. The bottom section is where you should keep all of your tax information.

With this method, everything is easy to find and organized. The IKEA cabinet I posted costs $79 (Canadian), but with some frugal searching I’m sure most of us can either find something similar that we already have, or find something at a significantly reduced price which will do the trick just fine. We should all be making this effort in order to be financially responsible people.

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It is extremely important to teach kids about money, but equally important is to ensure they get the most they possibly can from their education. I grew up in a small town of around 30 000 people, and saw far too many of these kids I grew up with decide by the time they hit grade 10 that they wanted their first job so they could buy a car, and then proceed to have their grades drop as they were neglecting school. So the question becomes: when should kids be allowed to get their first job?

Personally, I don’t think kids should get a job before they’re at least 16. By the time they’re 16 they will have fully understood the fundamentals of school and many will have the mental capacity and life experience to understand the importance of working at school to ensure they have a bright future. However, there are some limits I would impose, were I a parent:

1. No more than 10 hours per week. Minimum wage in Ontario is $8 per hour, and in BC it is $6 per hour. That gives kids around $110-150 of take-home pay every two weeks. For a 16-year-old, who for the most part should be only needing to spend money on things like new clothes, this is enough. They’ll learn the importance of working for their money while not having to spend so much time at it that it detriments their schoolwork. If they’re saving for a new car and want more hours, that’s what the summer holidays and spring break are for.

2. No working after school. One of the major problems I noticed in high school was a number of students would take weekday shifts, working from 3-9pm, and then not doing their homework. By only letting school kids work on the weekend, they have time during the week to finish their work.

3. If the grades drop, the job is the first thing to go. This is a fairly obvious one: students need to make sure school comes first, and if their grades drop, taking away their job is normally a good way to give them more time to focus on schoolwork.

This might seem strict, but I have seen a number of people’s futures ruined by overworking in high school for minimum wage. I didn’t get my first job until after I left high school, in part because my mom recognized this and wouldn’t let me get a job. I don’t necessarily think this was the best way to go about things, as I feel there is value in having teenagers learn about working for spending money, but at the same time I strongly believe it should really be secondary to school.

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Well, with the week over and me being back and comfortable in beautiful BC, it’s time for a summary of some of the best posts from around the personal finance blogosphere.

Frugal Trader posted a great article about getting organized for tax season… something we all need to do!

Money Ning used personal experience to convey why sometimes it’s best to not be frugal.

Money Smart Life lists the best credit cards to save money on gas.

JD at Get Rich Slowly has a great guide to stopping junk mail.

Also, thanks to The Happy Rock for hosting this week’s Carnival of Personal Finance and to On Financial Success for a very creative Festival of Frugality.

Have a great (rest of the) weekend everybody!

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Self-confidence is an amazing thing. Having it can make you, lacking it can break you. This applies to virtually all aspects of your life, especially your finances.

If your self-confidence is low, you’re not going to have the inspiration or the motivation to get your finances in order. Unfortunately, if your finances aren’t in order, chances are you’re not going to have high self-confidence. It’s a catch 22 with an easy fix: invest in other parts of your life to give yourself that extra motivation to get your finances taken care of.

When I say “invest in yourself”, I don’t mean spend some cash at the mall. I mean start eating healthier, go to the gym, do something relaxing, do something new, do all those things psychologists recommend to improve your personal well-being. If you start going to the gym every couple of days, it won’t take long for you to start feeling better about yourself. When you feel better about yourself, you’ll be more motivated to take care of your finances as well.

This advice doesn’t only apply to those looking to newly renovate their finances, gurus can take advantage as well: we all have our off days when we’ve let our finances slide a little bit. Think back to the last time this happened. Did you let other aspects of your life slide as well? Did you maybe go eat out a few days in a row instead of eating at home? Did you sit down in front of the TV with a container of ice cream instead of going to the gym after work? Chances are, if you’ve let your finances slip you’ve let something else slip too. Take care of the extenuating circumstances in other parts of your life, and you’ll have a much easier time getting your finances back into shape.

Take care of yourself first. That’s the most important thing. You’ll be amazed to see how much easier it is to take care of everything else once you’re taken good care of.

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We’ve all got financial goals, I’m sure. We want something to aspire to, we want a physical number to reach and we want to see ourselves hit these goals we have set. For the majority of us, our goals are long-term: we want to have a certain amount of money saved up for retirement; we want to have our home paid off in 15 years; when our kids grow up we want to be able to pay for their college or university education. But do we have intermediate goals?

Most people plan for the long term, and only the long term, with no thoughts about the in-between. Everybody should have short, medium and long-term goals. Rationally and mentally, this will help you achieve those end goals which you’ve  set for yourself. Consider myself: I’m currently 19 years old. My long-term goals are as such: when I retire, I want to have $3 million in cash to live off of before I die and own at least $4 million worth of real estate which I can sell should I outlive those savings. I won’t be needing those $3 million until I turn 65, which is 46 years away. When I see $500 being put aside every month for my retirement, those $3 million look a very long ways away. Mentally, it’s depressing, and there’s a good chance I would quit after a few years, thinking it was impossible.

This is where intermediate goals come in: I don’t need to worry about the final number, as long as my short term goals are on track.  Starting at $0, after one year I want to have around $6300 (I’m assuming only 5% interest due to the recession). After 2 years, increasing the interest rate 1%, I want to have $13100. After 5 years, I’m looking to have $36919. These numbers are far more real to me when I see the money I’m putting away every month. Mentally, it’s the stimulation to keep me going.

It makes sense from a rational perspective, as well. It’s easy to say you want to have a certain amount of money in x number of years. Short and medium-term goals give you the numbers you need to make sure you reach those goals. The amount you need to put aside every month will give you an idea of whether you’ve bitten off a little bit more than you can chew in the long run, or if you might have underestimated and can afford to put some more money towards your goal.

This applies to all parts of personal finance planning: I’m not going to arbitrarily buy property, I have a plan for it. If you don’t have short and medium-term plans for your financial goals, you need to sit down with a piece of paper and a calculator (or excel, if that’s your thing) and plan it out. Give yourself measurable goals which will show you how you’re doing on the way to reaching your long term goals. You’ll feel better by seeing that you’re at the right pace, and we all feel good when we reach our goals, even the little ones.

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I found this handy tool which unfortunately doesn’t work for Canadians, but which should give all those of you south of the border a good idea about whether or not you’re earning less, more or about the same as people in your line of work and location:

http://swz.salary.com/ 

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