A new year signifies a fresh start, so why not start by getting your financial records in good order.  Organized financial records are important for applying for loans or tracking your income and expenses to stay within your budget.  Plus, as you prepare your federal income taxes, having your financial records in order could save you a tremendous amount of time.    

It is important to keep good records in case the Internal Revenue Service (IRS) has questions regarding an item on your income tax return.  Good records will help you clarify any item under question in the event of an audit by the IRS.  The IRS does not require that records be kept in a specific way, so develop a system that works best for you. 

Not having your records in order could be costly, both in time and money.  You may need to spend time tracking down statements and receipts from a variety of sources to demonstrate to the IRS that your tax return is accurate.  If you cannot produce the appropriate documentation, you may be asked to pay additional tax and penalties.

You can use your checkbook to keep a record of your income and expenses.  You should document amounts, sources of deposits, and types of expenses in your checkbook.  You also need to keep papers, such as receipts and sales slips that prove a deduction.  Keep your records in a systematic way and in a safe place.  Consider organizing them by year and type of income or expense.