In a world in which virtually everything can be done electronically, keeping track of your financial records just got a lot easier — or more complicated, depending on your level of tech-savviness and your definition of convenience.
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As more banks and brokerages shift to e-statements instead of traditional paper copies, keeping tabs on financial records falls into the hands of you, the customer. The good news: A lot less paperwork to file away. The bad news: Someone has to chase down account balances, transaction receipts and monthly statements on various websites and then decide how to store them. And that someone is you.
And you better get used to it because the move to e-banking shows no sign of letting up. In fact, a new survey from Charles Schwab shows that 70% of Americans would be interested in using a mobile phone for banking and investing. Some 69% of those between ages 18 and 44 said they would be interested in mobile deposits, a feature Schwab is rolling out this week.
So what’s the best way to handle your records now that everything’s gone virtual? For some lucky consumers, the work is already done for them.
Gary Schatsky, president of ObjectiveAdvice.com, provides his clients with quarterly reports in PDF format. Most clients prefer it to a snail-mailed version, he says. The reports compile information on everything from their 401(k) plans to their savings accounts, which helps to “pull it all together” for clients. (Schatsky doesn’t charge clients who prefer to get their statements via regular mail, but some firms do: Vanguard, for instance, charges an annual fee per fund for those who don’t sign up for the e-service package.)
Of course, those without the benefit of a monthly overview are left to their own devices – but it needn’t be onerous.
“Electronic organization, if done right, is ideal,” says Patrick Bonnaure, founder and CEO of bookkeeping services firm ProLedge.
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Here are some tips for managing your e-records safely and securely.
Check your e-statements once a month
Many financial institutions will alert you via email when an e-statement or receipt is available for download. “For an individual, checking statements once a month is plenty,” says Bonnaure. Set aside some time each month to tackle all of them at once.
Don’t bother with the “print” button
Now’s your chance to go green. “Having your info stored on your financial institution’s servers is equally if not more secure than having your statements printed in hard copy where they can sit around the house and exchange hands,” says Diane Russell, senior vice president of platform services at Charles Schwab.
Bonnaure suggests downloading the statements to a secure computer to ensure you still have access to your records. That gives you the information you need if you want to switch financial institutions, dispute something in your statement, or find yourself audited by the Internal Revenue Service.
File the the statements on your computer according to financial institution and consider buying encryption software, which protects the files from being viewed by anyone else should your computer be stolen.
Back up your files on a thumb drive or external hard drive to protect against computer malfunctions and meltdowns. Online services such as Mozy automatically back up and encrypt your data off-site.
Protect your online accounts with passwords including both upper and lower case letters, numbers and special characters ($,%, !) — and keep it to yourself, says Paul Stephens, director of policy and advocacy at the Privacy Rights Clearinghouse.
Steer clear of logging on to your online accounts at a free Wi-Fi hotspot or on a public computer, which may be vulnerable to “sniffer software” and other hacking attempts that could steal any data transmitted. At home, ensure your computer is protected with anti-virus software and your Wi-Fi connection is secured with WPA2 technology, which offers the highest level of protection, Stephens says.
And look on the bright side: e-statements have the added security of password protection, whereas traditional paper copies can easily get lost, stolen or fall into the wrong hands accidentally. “People have to remember that before computers, they’ve been putting secure information in envelopes,” says Bonnaure. “The risks [of electronic statements] are reasonable as long as people know how to manage them.”
Beware the fine print
Most financial institutions include terms and conditions when they offer their services online, including recommending the most up-to-date browser, anti-virus software and instructions not to share your password. Be sure to comply, Stephens says. “If you don’t, in theory, the bank could hold you responsible for any problems that arise.” Keep in mind that using personal finance sites that require you to share your banking password could be in violation with the terms agreed upon with your bank.