How many times have you started a new year with the same old resolutions? In this issue of FDIC Consumer News we want to help you get closer to achieving a resolution you may not have thought of before — to simplify your financial life.

We've compiled a list of things you can do to make your banking, bill paying and other financial chores easier. These ideas can help save you time, reduce some of the stress of handling your finances and making decisions, eliminate clutter, lower the fees you pay, and maybe even help you earn a little extra on your savings and investments.

We're not suggesting that you try everything on our list, especially if you like handling practically all of your banking business with pen, paper and mail instead of electronically. (See Afraid to Bank Electronically? Read This.) But if our report encourages you to simplify even a few aspects of your financial life, the FDIC will have made progress in achieving one of our resolutions — to help educate consumers about how to save and manage their money. So start thinking about the new year... and a new way to get a handle on your financial life:

Organize your personal and financial papers: Ever been late paying a bill because you misplaced it? How easy would it be if you or a family member needed to quickly find crucial information about your savings, investments, credit cards, insurance or your other personal finances? Chances are you could stand to benefit from organizing your financial records. Here are some ways to get started:

• Maintain a central filing system at home for your bank, brokerage, tax, insurance and other financial records. Also designate one place for gathering your bills. For important papers you want to have easy access to but also want to protect against theft and fire — your passport or Social Security card, for example — consider a relatively inexpensive but durable home safe.
• Pay ongoing attention to your bank and credit card accounts. Keep your checkbook up to date. Record all transactions, including ATM withdrawals (along with any fees or service charges), debit card use, and other deductions that do not involve writing a check. Regularly balance your account to avoid bounced checks, which can be costly. And, review your bank statement as soon as possible after it arrives or monitor your account online or through telephone banking. "You want to make sure the charges to your account are accurate so you can quickly dispute any errors or unauthorized transactions," said Janet Kincaid, FDIC Senior Consumer Affairs Officer.
• Consider renting a safe deposit box at your bank for certain papers or items that could be difficult or impossible to replace. Examples include old family records (such as birth certificates), bonds and originals of important contracts. Some experts also recommend a safe deposit box for keeping copies of important account information or documents in case they are lost or damaged at home. What not to put in your safe deposit box? Anything you might need in an emergency, such as your passport or medical-care directives, in case your bank is closed when you need them. When it comes to your will, ask your attorney about the best place to leave the original (copies aren't valid). In some states or situations, says FDIC attorney Joe DiNuzzo, "it may be advisable to have your attorney or another trusted person hold your original will in case, after your death, your safe deposit box isn't easily accessible to the executor of your estate."
• For the benefit of your heirs, either dispose of information about closed bank accounts (after you no longer need the documents for tax or other purposes) or clearly mark the accounts as closed. This could save you and your heirs countless hours trying to resolve mysteries involving an old bank account or a life insurance policy discovered around your house.

"Take a little time now to develop or improve your recordkeeping system, and encourage your family members to do the same," added Kincaid. "The time you spend organizing your records now will be well worth the time and effort that could be saved in the future."

Get rid of the papers you're sure you don't need: Many people hold onto bills, bank statements, receipts, cancelled checks and other documents far longer than necessary simply because they worry about some day needing them to prove a payment or another transaction. We can't tell you when it's safe to throw away certain financial documents — that's for you to decide, perhaps after consulting with your accountant or attorney. But we can give some general guidance that many people can follow.

For example, it's reasonable to keep your deposit, credit card, ATM and debit card receipts until the transaction appears on your statement and you've verified that the information is accurate. Save your credit card and bank account statements for about a year if they have no tax or other long-term significance; the rest you should maintain for up to seven years. If records pertain to your purchase or sale of stocks, bonds and other investments (including receipts for home improvements), keep them for as long as you own the investment and then seven years after that.

Before tossing away any document that contains a Social Security number, bank account number or other personal information, shred it to avoid becoming a victim of identity theft. For more guidance, see "Your Bank Records: What to Keep, What to Toss... and When," in the Fall 2002 FDIC Consumer News at www.fdic.gov/consumers/consumer/news/cnfall02/bnkrcrds.html.

Consider consolidating accounts: Think about how many different financial institutions you use and how many accounts you have. You may be able to simplify your finances, reduce mail and paperwork, and even get better deals by concentrating your business with fewer institutions. "Many banks will offer special services, discounts or more attractive interest rates if you maintain multiple accounts or keep a larger balance," added Kincaid. "The bottom line is that it just may not be worth running all over town to different banks for different services unless their offers are significantly better than what one bank would offer."

Also look at how many credit cards and department store cards you carry. You may be better off using just two or three cards for your purchases. This makes it easier to keep track of your purchases and payments. Many card companies will even send a statement at the end of the year that breaks out your spending into different budget categories, such as entertainment or clothing.

Use direct deposit: Ask to have your pay, pension or Social Security benefits automatically deposited into your account at a financial institution. The service is free and easy to set up. Deposits are made quickly — checks don't sit around your house waiting to be delivered to the bank. You avoid filling out deposit slips, preparing envelopes and waiting in teller lines. And, direct deposit is safe and reliable, while paper checks can be lost, misplaced or stolen.

Be aware that it can take weeks to have a direct deposit arrangement up and running. This is important to remember, especially if you already get paid via direct deposit and you decide to change banks. "To avoid delays, be sure to keep your old account open until all your direct deposits are going into your new account," cautioned Kathryn Weatherby, an Examination Specialist for the FDIC.

Put some savings on autopilot: Arrange with your bank, employer or benefits agency (such as the Social Security Administration) to automatically transfer a certain amount each month to a bank account or mutual fund, to purchase a U.S. Savings Bond, or for another investment. This approach helps you stick to a savings plan because the investments are made like clockwork, and the results can be impressive.

Consider using a credit card or debit card at the checkout counter instead of writing checks. Both offer speed and convenience over carrying a checkbook and writing checks. "Many consumers also like to use their debit card to obtain cash over and above their purchases," said Weatherby. "This saves you a trip to the bank or ATM to get extra cash, but make sure you understand your bank may charge a fee for that withdrawal." Check with your bank to find out if it charges a fee for this service and how much.

Unsure about how debit cards work? A debit card looks like a credit card and often has a MasterCard or Visa logo; however, the funds come directly out of the bank account you designate. Remember that some banks charge fees for using debit cards, especially when getting cash back at the checkout counter or with other transactions that may require you to key in a PIN (personal identification number) instead of signing your name.

Take advantage of ATMs: Automated teller machines offer quick, convenient ways to get cash, even when you're in a foreign country. But you also may be able to go to one of your bank's ATMs and make a deposit or loan payment, transfer funds between accounts, or inquire about your account balance.

Remember, though, that withdrawing cash from an ATM that doesn't belong to your bank or that's not part of its multi-bank ATM "network" can cost you anywhere from $1 to $4 per transaction. Some banks also charge for balance inquiries. You can keep a lid on ATM fees by using your own bank's ATMs whenever possible because practically all banks offer accounts with free ATM transactions to their own customers. For more information about using ATMs, see the Spring 2004 FDIC Consumer News at www.fdic.gov/consumers/consumer/news/cnspr04/index.html.

Another option is to arrange with companies to automatically charge a monthly bill to your credit card, for you to pay back later along with other expenses.

Try banking by phone: Many banks allow you to use a touch-tone phone to manage your accounts any time, anywhere, free of charge. Just follow the voice-prompts to check account balances, verify recent transactions, transfer money between accounts and receive information on such topics as branch locations or current interest rates. First contact your bank to find out what's offered and what's involved in getting started.

While consumers today can transfer money by telephone only between linked accounts at the same bank, many observers say the phones of the future could make our lives even simpler as portable payment devices.

"As cell phones become more prevalent and more powerful, consumers will be doing a lot more with them than just making calls, taking pictures and playing computer games," according to Donald Saxinger, another FDIC Examination Specialist. For example, he said, "Mobile phones may soon be used as 'electronic wallets' that are able to transfer money directly to other people, to merchants or to vending machines."

Explore banking and bill paying over the Internet: Online banking lets you review deposits and withdrawals, keep track of your balance, and transfer funds between linked accounts 24 hours a day, seven days a week. Most banks also allow you to pay bills quickly and easily online by keying in a few details and clicking "OK." Online bill paying often is either free of charge or for a fee that is usually less than what you'd spend on postage.

In addition, "the ability to monitor your account any time, without having to wait for a monthly statement in the mail, enables you to quickly report a billing error or even identity theft," said Michael Jackson, an Associate Director of the FDIC's Division of Supervision and Consumer Protection. "And the sooner you spot a problem, the easier it should be to fix.

"You can even use the Internet to fill out a loan application from home, when and where it's convenient for you. "Most consumers like to finalize a loan in person, at the bank, with a pen and a handshake," said Weatherby. "But it's a big plus being able to take care of the bulk of the preliminary work at your leisure and at home, where you already have the income and expense records you may need, and where you can send encrypted information securely over the Internet to your bank."

Use the Web to comparison shop for financial services. The Internet also lets you research products and services among hundreds of financial institutions any time of day without ever leaving home. "And the more information available to the public, the more competition there is, and that can mean better prices for consumers," said Saxinger.

Remember, though, that not all Web sites and e-mail advertisements are from reputable companies, and some may be the clever work of crooks attempting to obtain personal information they can use to commit fraud. See the box on the right for some reminders about how to protect against scams.

Final Thoughts

We hope we've given you some new ideas you can use to simplify your financial life. If you're not sure what's best for you, speak with a bank representative or a trusted advisor.

Also consider starting small, maybe with one or two new ways of doing things that are easy and not too intimidating at first.

And remember that if you need more guidance about your consumer protections, the government agencies listed on the For More Information page can help further simplify your life with reliable help and information.