On average urban households in India have over 100 documents to store, update and manage on a regular basis! Some of these are permanent documents like Aadhaar Card or PAN Card while others need to be renewed frequently such as Insurances, Rent Agreements, Pollution Control Document (PUC) of vehicle and others that just need to be stored only for some time just for any potential future reference such as Credit Card statements.
It is daunting to imagine how can someone manage so many documents properly, but if we bucket them then we have 3 broad categories of documents – Financial Documents, Personal Documents & Household Documents. In this 3-part series of articles we’ll discuss what these documents are, why is it important to manage them and how to go about it.
We’ll start with the first & in a sense the most important among the three categories – the Financial Documents. Every household does some financial planning for their day-to-day expenses as well as their future. It can range from different kinds of investments, taking loans for bigger expenses like buying property or just saving money in their bank accounts. Documents related to these are very critical and need to be managed properly. To understand these documents better, it can be further broken down in to 4 sub-categories:
In today’s digital world, all our banking has moved online and there are newer and newer ways of banking coming every day including bank accounts, debit cards, credit cards, Digital Wallets, UPI etc. All of us typically have multiple accounts of each type and it becomes a challenge to keep track of things like account numbers, login ids, passwords, UPI ids, payment due dates, money in each of these accounts, expenses happening from each of these accounts etc.
Keeping track of these financial documents is critical because all our hard-earned money is being managed through these accounts. Loosing something like a credit card or debit card can be a nightmare because you need to get the card blocked immediately and for that you need to know the card details as well as customer support number of the bank.
Most of these documents are not required in physical forms and can easily be stored in digital formats where the important and necessary information is stored properly. Being in digital format it is easy to manage documents as well keep track of payment due dates, details of the expense / bank statements etc.
Investment documents include information regarding Mutual Funds, Shares, Provident Fund, PPF, property investments and all other kinds of investments.
These are obviously very critical financial documents that need to be managed to track the value of those investments, trade over those investments etc. In cases like Property investments, having original documents is very vital to prove ownership.
All these documents are largely being managed digitally today, except for Property investments. In case of property documents, though originals are very important, having digital copies available gives the comfort to a large extent regarding safety of the document. Since we keep investing & divesting, a lot of these documents change sometimes, it is also important to keep them updated & discard the ones that are no longer valid. Also, at times it is important to keep record of these investments for a very long period, in case there is an income tax or similar inquiry. Hence having digital format document is very critical.
Every household has different kinds of insurances such as Life insurance, medical insurance, vehicle insurance, Home insurance etc.
These are important financial documents because they make sure that we and our families are at least financial ready & secured for any unforeseen situations.
Again, these documents are largely being issued digitally today but need to be managed properly at one place so that in case of an emergency, any family member should be able to access these documents and refer them quickly. In some cases, the original issued physical documents are required but it is best to also scan the documents and digitize them so that they can be accessed anytime anywhere & there is no risk of losing the document.
Non-banking documents included all other financial documents that are not banking related, insurance related or investment related such as loan documents, locker documents, Donation documents etc.
These documents, especially loan documents are very important as they are a measure of all your liabilities. They are also important when you are looking to transfer / sell / buy an asset against which you have a loan; as they become the base of the transaction & the value being sought for during the transaction.
All the loan documents have a time period and need to be maintained properly at least for that course of period. In fact, it is suggested to keep them even after the loan is paid off completely as it can come up in any kind of inquiry or dispute in future.
Financial documents are usually managed by the primary earning member of the family. While they are important for keeping track of financial condition of the household, they are also very critical from inheritance point of view. In case of an unforeseen incident such as a medical emergency or the sudden demise of the primary earning member, their family members are the ones who would need these documents more. Hence, sharing of these documents with all family members is also very important and a digital document storage makes that very easy.
Snehanshu leads Product & Strategy at Sorted AI. He is an IIT Bombay & ISB Hyderabad alumnus. He has more than 12 years of experience in consulting, operations & entrepreneurship. He loves to run and is a proud owner of a Golden Retriever.