Investors May Need to Update Records

Stephen “Scotty” J. Scott Investment Management

For many years now, companies have seen the myriad benefits of operating in a “paperless” environment. Households, on the other hand, have been reluctant to realize the benefits of transforming your important personal information from a bulky paper filing system into a streamlined digital masterpiece. This article will give you a plan and the tools to tackle this seemingly daunting task, which, if done correctly, can be an invaluable future resource.

Counter intuitively, the primary advantage for going paperless is easy retrieval and organization of information – not to reduce paper. Other advantages include disaster proofing, reducing clutter, and the ability to access your documents from anywhere and on any device. The following points demonstrate how to create, implement, and maintain a paperless environment.

Start with a plan.

The plan should be simple to learn, easy to implement, and manageable to maintain. Initially, you may be overwhelmed by the task because you had years or decades of accumulated files. To get started, pick a firm date and everything from that point forward goes into your paperless system.

Be flexible with entering documents into the system.

There are numerous types of scanners on the market, but most households will have some sort of multifunction scanner/printer combination. These work perfectly in a paperless system, but don’t limit yourself to one entry method. An under appreciated and very convenient scanner is your smartphone. There are apps that take pictures of documents then convert them to scanned images without loss of quality or speed, and you will never have to go digging around for your receipt when you need to return an item! For large scanning volumes, I recommend a standalone scanner. They offer increased speed with single pass duplexing and larger sheet capacity than most multifunction printers.

Choose where you want your files to live.

I recommend using cloud based storage. There are many companies that, for a reasonable cost, provide online document storage and retrieval from any internet ready device. The most popular providers are Evernote, Dropbox, and Google Drive. If you are concerned about online security, password protect or encrypt your individual files to provide secondary measures in case of a security breach. For those unwilling to store information online, you can use your computer storage. However, external backup is absolutely essential in this case. Hard drives can and will fail, so make sure you are prepared. I cannot stress this enough.

Make sure you can find what you are looking for.

Again, the most important reason to go paperless is to easily find what you need when you need it. At a minimum, use a consistent strategy for naming your files. like to include the date, provider, and brief description of the contents. For example, 2016-11-28 Costco receipt, 2015 1099 Charles Schwab, or 2016-10-15 Labcorp Test Results. Create subject folders or groupings of documents such as Medical, Tax, Home, Auto, etc. Many scanners and programs will have a helpful function called Optical Character Recognition (OCR) that makes every word in the scanned document searchable. Document tags are also useful when searching through your documents.

Use technology to your advantage.

There are tools and services that make going paperless easier. Evernote Premium, for example, has built in OCR capability, tagging, and document/note encryption. Many scanners have the ability to send directly to cloud storage providers, and you can transfer documents from your smartphone or tablet. Another app that I found extremely helpful is called www.Filethis.com. It automatically downloads statements (user provides login information) from various companies with which you have relationships including brokerage statements, electric bills, cable/internet providers, and medical bills.

Keep a physical copy of important documents.

When transitioning to a paperless home, you should scan anything you might need in the future. Importantly, there are a handful of items that you should scan and also keep the physical copy in a safe location. These items include anything with a raised seal such as birth/death certificates, notarized documents (including wills, trusts, and other estate planning documents) and contracts with original signatures.

Commit and shred.

Now that you have the tools you need and a plan to implement, you have to commit to making the transition. It will take time to make it a habit but the extra effort will be worth it. To make the transition easier, I suggest you set up a pair of physical boxes initially. One for document shredding and one for keeping documents that fall into the categories in the previous step. This will help keep the scanned documents separate from those waiting to be scanned, filed, or discarded.

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