5 Tips for Keeping Your Financial Documents Organized

Is financial clutter getting you down? Do you see bills, tax documents, and bank statements everywhere you look? If you are like millions of Americans, your financial documents are anything but organized. Rather, they’re scattered from one end of your home to the other — under your bed and in the kitchen cabinet. Do you know where to find what you need?

Organizing your financial documents may sound like a tough task. It is. Fortunately, once you have a system in place and see how easy it is to get by when you are organized, you’ll never look back. If you’re fed up with your financial clutter, follow these five steps to get organized.

1. Get the Tools You Need for Success
Staying organized involves more than finding a drawer and putting all of your documents in it. Your decision to get organized is a “back to school” moment. You’ll need the following:

• A file cabinet or storage crate
• File folders
• Post-it notes
• Paper clips
• Envelopes

Pro Tip: Use hanging folders in a filing cabinet for optimal organization. Just label each folder according to its contents, like taxes, bank statements, insurance, savings, and bills. If you’re keeping track of personal or business receipts, Shoeboxed can help by scanning and organizing your receipts for a small fee.

2. Gather Your Clutter
The toughest part of organizing is getting all of your documents in one place. Do you know where to look? Are you willing to spend a couple of hours on this step alone? In this early stage, you don’t have to worry about being neat. Just get everything in the same place, so you can weed through the clutter and then start organizing.

Pro Tip: This is the toughest step for me, because I never know where everything is. Set aside some time so you can be comfortable and patient, and use this checklist for documents:

• Bank account statements
• Mortgage documents
• Receipts
• Insurance information
• Tax forms

Of course, you’ll find a lot of subcategories, but this checklist will give you some goals as you search the different rooms of your house for your old paperwork.

3. Take Your Time
Once you’ve gathered all of your statements, receipts, and other files, you’ll realize one thing: Sorting is going to be a time-consuming process. You can’t avoid it. But you can make efficient use of your time.

First and foremost, consider the checklist from step two. Designate an area of your desk or table for each of the categories, and just do some top-level organizing. Once you have all of the papers in their general areas, you can see which topics will be the toughest to tackle. Those are the ones to go through first, and you should break them down into subcategories. For insurance, for example, you’ll use separate folders for car insurance, health insurance, and life insurance. After you get your piles ready for subfolders, sort each one in chronological order so you can easily find the right statements when you need them.

Pro Tip: Once you’ve gathered all of your paperwork, try to gauge how much time you’ll need to sort through everything. Organizing your financial documents is not something to do to pass time during commercial breaks or while the coffee’s brewing. You might need two or three hours, so set that time aside so you can avoid distractions.

4. Don’t Get Lazy
Believe it or not, getting organized is the easy part. Staying organized is much more difficult. If you’re not careful, you’ll quickly end up right back where you started. Don’t turn your hard work into wasted time. Once you’re organized, every time you receive a new financial document — even if it seems insignificant or it’s been a long day — make sure you put it in the appropriate folder.

Pro Tip: I’ve always had issues in this area. At the beginning of the year, when I am getting ready to file my tax return, I get organized. Everything looks good up until April or May. Soon enough, as summer settles in, things get out of control again. To solve the problem, I’ve made filing part of my daily mail routine. Instead of skimming through mail as I walk through the door, I sit at my desk to open my mail, and I immediately put financial statements in their appropriate folder. I also shred anything that I do not need to keep.

5. Shred It!
Staying organized also means knowing when to throw things out, otherwise your clutter will pile up again. While you need to keep many documents, like tax returns, do you really need that grocery receipt from 5 months ago? What about your bank statement from July 2008?

Getting rid of paperwork makes it a lot easier to stay organized. Less paper, less potential clutter. But don’t just toss old statements in the garbage or recycling bin. Shred any documents that contain sensitive personal or financial information. Even though you think no one’s sifting through your garbage, many cases of identity theft start with thinking “it won’t happen to me.”

Pro Tip: The IRS suggests that you keep tax return information for seven years. That sounds fine, but I don’t trust them. Instead, I keep all of my tax documents no matter how old they are. As long as they are organized they don’t take up much space.

Final Thoughts
Money mail probably appears in your mailbox almost as frequently as junk mail does. If you’re overwhelmed by utility bills, bank statements, and quarterly retirement updates, you need a system in place to stay organized. If you keep tossing paperwork in the same overflowing box, it’s almost as bad as not saving the paperwork at all. When the phone call comes, will you be prepared to find the one statement you need to refute a bank error, or defend an old tax deduction?

Organizing your financial files isn’t just a spring cleaning project. It’s a year-round process, and if you follow these five steps you will be well on your way to success. What tips and tricks do you use to stay on top of your filing system?

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