Avoiding death by paperwork

The kid calls. As usual, it is a last minute panic call. We’re visiting the nuclear facility and I need a valid identity (ID) proof—passport will do. When do you want this sweetie? Now. Ummm… but you are far away in boarding school and the passports are at home and I am at work. Sort it out, mum.

Luckily for all of us, this ends well. I remind the kid that I had attached a copy of the passport in a mail I sent her some months back—download, print and get your school head to sign off and then go, get radioactive. Click.

Being the only person on this side of the extended family who is the ant and not the grasshopper, I’ve got my own version of an efficient document sorting, saving and retrieving system in place, and now I am better able to deal with document crises as they happen. This super system is put to test once every year around this time when each of us (other than those who get a free ride because their spouses do all the work) begins pulling out the paper work to start filing a tax return. I can see the entire day loom before me, complete with flying bills as the fan does its best to cause whirlwinds, retrieving receipts from the maid as she bears down on any errant paper on the ground and trying not to step on the dog’s tail as it stubbornly guards that one cupboard I totally must open now.

So what works? A good filing system. I find that a file per relationship works the best for me. A file for each bank, each card, each utility, each investment, each insurance policy—life, home, medical, car. The files contain the original document and the subsequent papers that accumulate. The original document is scanned and saved. Then there is one active file in which goes all the paper needed for tax filing that year—salary stubs (if you are still getting paper), any other cheque stub that comes in—a refund or any other inflow into your bank.

Reconciling inflows into your bank at the end of the year is a nightmare if you have not kept details of what the payment was for. Bills that can be claimed for a tax break go into this file. Interest rate certificate on the home loan, receipts of tax deducted at source (TDS), and investment account statements for transactions that have caused long- or short-term capital gains or losses, bank interest paid statements. Tax-saving investment receipts—insurance premiums, receipts of ELSS (equity-linked savings scheme) and PPF (Public Provident Fund). Medical insurance premium receipts. A box file is the best for this mass of paper. Easy to blindly stuff the box with the paper as it lands and then sort it out once a quarter.

However, life is much more complicated than just managing tax papers. There is a variety of other documents that need careful sorting and keeping. All the various cards and numbers that prove that we live and are who we are —PAN (Permanent Account Number), Aadhaar, voter ID, passport—all need to be copied and scanned.

Copies are kept in one file. Scans are mailed to the spouse and put into the cloud (with adequate password protection, of course). Originals should be kept either in a locker or in a safe place in the house. And it is always a good idea to keep passport size photos of yourself and the immediate family handy in the wallet. The documents actually needed will always be more than what they tell you on the phone.

Medical insurance cards are scanned and uploaded, and cards are kept in a location that others in the house know. A new animal is the digital signature that needs to be ‘kept’ safely.

Then, you need to have a box file that will have the birth certificates, class X and class XII mark sheets, college degrees, and other professional certificates. Good to scan and upload these as well. There’s more: one file per company worked with to keep the appointment letters, hike letters and other paper such as EPF (Employees’ Provident Fund) receipts.

Another box file has the original documents and receipts of the gadgets bought. Come servicing time, for some reason, they want you to pull out the original receipt.

It is always a good idea to keep copies of the credit and debit cards in your bank files—you will need it in case you lose the card and need to report it.

Sometimes, just sometimes, it feels like too much effort to maintain the urban mass affluent life with all the bells and whistles. It has come to a point when each new purchase is evaluated with regards to what it means in terms of increased paperwork. Death by paper. If you have a better system—do mail me.

Monika Halan works in the area of financial literacy and financial intermediation policy and is a certified financial planner. She is editor, Mint Money, Yale World Fellow 2011 and on the board of FPSB India. She can be reached at expenseaccount@livemint.com