Why is personal record keeping important?

Your personal data room is a place where you keep all your important documents, whether online or in a physical file. But since we are talking technology here, let’s stick to online storage because this gives you access benefits over the manual systems. I use my paid Google Drive for this purpose. You can choose a platform that works for you. 

So, what should be in your personal data room (or what some call a lifebook?)Your personal data room should include: 

  • Your latest bank statements (and actually take time to review your bank statements) 
  • Your latest payslip
  • Certified copies of your passport, permit and/or ID documents
  • Certified copies of your birth certificates
  • Medical records for yourself and your dependents
  • Your latest income tax assessment and other supporting documents. We are now approaching the 2020 tax season and by this time, all documents you need to file your tax return should be in your data room already. 
  • Your latest statement of assets and liabilities. This is so that you keep track of your net worth at all times. 
  • Investment and insurance policies
  • If you run a business, your latest financial statements and management accounts. When you look for funding, funders will ask for these. 
  • Title deeds and registration documents for your vehicles.
  • Wills and testaments. 

A personal data file is important because:

Personal example: One day I went to a dealership to buy a car I wanted to put on Uber. The sales agent gave me a list of things he needed to process my application for the car. I said, “hang on. I have a few documents I put together already, please check if there is anything I missed.” He was surprised that I had everything they needed. This was made easy because I keep a personal data room for myself. All my latest documents are in place. Of course, credit is not afforded simply because you are organised, but this made life easier and the process went quicker. 

Now I know some of you could be “judging” me for going to buy a car on credit. But, here is the thing, I do not believe in bad debt. I recently cleared all my bad debts. I believe in good debt. Bad credit is loans that take money away from you. Good credit is debt that brings in income or that you pay off using other people’s money. For example, that uber car was intended to pay for itself. The day I realised the uber model was not working for me, I sold the car. Another example of good debt that you pay off using other people’s money (what they call OPM) is getting a rental property on a mortgage (bond). If you get your location right, that property will pay for itself and even quicker. 

Why else is a personal data room important: 

  • You will have all your essential documents in one place and if your data room is online then you can access it from anywhere in the world and from any device. 
  • In cases of emergencies, you will not have to run around to get your documents when (e.g. applying for finance or other life-essential requirements). Also, remember some bankers love dealing with organised people. When you appear unorganised, when you try to get good credit, they may perceive you as a risk or a time-waster (because you are reacting to their requests and not being proactive.) 
  • It will make it easier for your loved ones once you are no longer there because there is no need for them to run around looking for your documents. Your documents are in a single place and up to date. 
  • Putting together your personal data-room may also help you discover policies, bank accounts or investments that you had forgotten about but that you do not need anymore. 
  • You may also discover credit cards or retail shops’ cards that you no longer use but where you are still charged certain fees. You will have an opportunity to destroy these cards and close all accounts that you no longer use.
  • Going through your bank statements may help you identify unauthorised transactions. This will help you save and cut unnecessary costs.

NB: Share this personal data room with someone you trust and love. This is important because if anything happens to you, then that person knows where to get all your policies to make life easier for the ones you left behind. If you can afford it, this person can be your lawyer. You can learn about business data rooms here.

About the author: 

Lazarus Kasek Magora, CA (SA), is the CEO at Eva Financial Solutions (a digital accounting and consulting firm)  and Co-founder and member of BCA ( a group of CAs seeking to help each other solve real-life problems and to develop each other through information sharing.) 

Contact details: 

Company: Eva Financial Solutions 

Position: CEO 

lazarus@evafinancialsolutions.co.za

021 823 9684 

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