Money tip #8 – Buy a shredder

The aim of this blog is to help everyone sort their finances. While admittedly some posts will be relevant to some more so than others there will be posts, such as this one, which are truly universal...

One of the first things I’d recommend to anyone who wants to get serious with their finances is to buy a paper shredder. You may think I’ve lost the plot but bear with me…..

It can feel like a constant stream of paper, bills, junk mail etc floods through our letter boxes everyday. This can be overwhelming and often people just scoop it all up and throw it on the kitchen counter under the guise of ‘I’ll look at it later’. In reality they seldom do and so the bills pile up and then begins the cycle of fire-fighting their finances because forgotten bills start to rear their heads. Either that or there is a chance they will just bury their head in the sand altogether.

So this is where a shredder helps. Buy yourself a shredder which will set you back about £10-20. (make sure it’s a cross cutting one as these are more secure). Then plug it in in a corner somewhere and leave it set up.

Next sit down and attack that pile of papers. Systematically open every letter and split them into 3 piles:

1. Action pile (anything that requires action from you i.e. a bill)
2. Shredding (anything that does not require action but contains personal information about you, i.e. names, addresses, bank details etc)
3. Rubbish/recycling  pile (everything else i.e. flyers)

Then shred and recycle the relevant piles – leaving you the Action pile. You’ll be surprised how small this is. Then order the Action pile by priority (things which require urgent action go on top) before systematically working through it, making phone calls or taking whatever action is necessary. Once everything is done then file copies away in a file which you should store somewhere safe in case you need to refer back to it.

Admittedly the above can take a while so you may need to split your time up over a weekend. But once you get as far as having an ACTION pile you are now in charge of your finances rather than them being in charge of you! So congratulate yourself.

But going forwards, the shredder is still important. By leaving it set up somewhere close to where you usually open your post you can immediately sort it. It will take seconds to open each letter and either shred, recycle, or designate it to be acted upon. This way you are constantly on top of things. Think of your shredder as a doorman. It decides what gets through the front door so limiting the chances of things kicking off inside (finance-wise). This habit will become second nature and is probably the single most important act that helps me keep on top of things.

But………

Perhaps more importantly by shredding your sensitive data you will help protect yourself from identity fraud. Identity fraud is when somebody pretends to be you. They may do this in order to buy things, usually on card, in your name that they never intend to pay for. You and your bank can end up with the bill. Approximately £1.6million worth of card fraud occurs in the UK every day and a fraudulent transaction takes place every 8 seconds, according to The Gartner Group, a technology research group.

Prevention is better than cure when it comes to ID theft and could save you both time and money. By shredding your personal data you will prevent it falling into the wrong hands once it’s thrown into the bin. But also by dealing with your post everyday you will likely spot if you have been a victim of ID theft sooner rather than latter (i.e. strange entries on your bank statement) which will help you in trying to get your money back

For more information on identity fraud and ways to protect yourself see today’s second post which contains a useful link.