BUILD YOUR FILING SYSTEM
Start out with your household filing system. And yes, you may end up with two filing systems: one for physical paperwork and one for digital documents. Of course, you can bring everything together by either printing or scanning documents as needed, but that’s ultimately up to you. The important thing is that you create a system to hold and categorize your important pieces of paperwork.
It’s helpful to have folders set up for each major category—some examples include: health, job, banking, credit cards, taxes, investments, home, automobiles, insurance, major purchases, and other loans. On a weekly basis, review all of the documents that have arrived in the mail or landed in your inbox and sort everything into these folders. While some items can be thrown out (after being shredded), you’ll want to save insurance papers, receipts for major purchases, account statements, pay stubs, health forms, and anything related to your taxes.
Also: create a folder for the current year taxes. Having everything in one place will make things easier come tax time.
SEPARATE YOUR BILLS
Household bills—anything that’s waiting to be paid—should be filed using a separate system. Sort your bills by due date and add them to the folder of the month they are due. You can also track bills in a personal finance program, spreadsheet, or with a money management app.
It’s best to pay household bills on a weekly basis, although if you only have a few bills, you can pay them bi-weekly or monthly. Online bill pay systems are a great way to stay organized, save money on stamps, and get your payments cleared quickly. Otherwise, you’ll need to make sure that you write and mail your checks well in advance of the due date so that you aren’t charged a late fee.
CLEAN YOUR FOLDERS REGULARLY
On a regular basis, either semi-annually or annually, go through each of your folders and clear out anything that’s no longer needed. If any of the folders are getting too full, separate them out by year, and store newer information in the front of your file drawer, so that it’s more accessible.
How long should you keep your documents? Depends on the document. Most tax documents should be kept for at least seven years. Receipts for major purchases and title information should be kept for as long as you have the corresponding item. Statements and other documents that are received on a monthly basis can be tossed after a year (or less).
While organizing can take some time in the beginning, having all of your financial information sorted appropriately will make day to day bill paying and home financial management easier for you.