Organize Your Financial Records

Late fees, missed rebates, lost paperwork—your disarray can cost you! Organize your paperwork once and for all with this step-by-step plan

Use this system to help you easily locate your records when you need them, reduce your chances of identity theft and make tax time a little easier.

STEP 1: Create a file system for this year's financial records.

Keep credit card and insurance statements as well as sales receipts here—but only for the current tax year. Everything older should be tossed, stored with past-year tax documents or put in a permanent file.

What you will need: Manila or colored folders, hanging file folders with stick-up labels (including several with a wide bottom for large files) and a drawer or file box.

Get started: Designate hanging files for the following categories: banking, business, cars, credit cards, household, income, insurance, investments, kids, legal, medical, warranties and miscellaneous. Inside each hanging file, include several manila folders that fit within that category. For example, keep folders for each vehicle in the cars file, including all the current paperwork for payments, insurance and maintenance. Don't sweat the categories: Do what makes sense to you. You can always make changes.

 

STEP 2: Put together an action file.

Think of this as your running to-do list. Store pending bills, statements you need to review for accuracy, recent receipts and anything else requiring action until you have time to read them and reconcile or file them.

What you will need: A place to hold your actionable items and six manila folders.

Get started: Label your folders Bills to pay, To do later, To do this week, To file, To read and To shred. Stash these folders someplace accessible so you can drop in just-arrived credit card offers, that afternoon's receipts, the fund-raising request for your daughter's Brownie troop and similar items.

 

STEP 3: Maintain your system. 

Set aside enough time on a regular basis to go through each item in your action file.This is an important step; do it consistently so nothing slips through the cracks.

What you will need: A calendar, your files and a block of time.

Get started: During your session, pay any bills that are due, balance your checkbook, reconcile receipts with your bank or credit card accounts, file your papers, check items off your to-do lists and shred papers you no longer need. Don't forget to empty your "To do this week" folder and move up items from your "To do later" folder.

STEP 4: Organize your remaining files.

Aside from permanent vital records and tax documents, you don't need to hold on to most of your paperwork for more than a year. Audit your existing files to find a place for everything.

What you will need: A file box will suffice for old tax paperwork. Consider a locked filing cabinet to keep permanent documents, such as passports and property titles, accessible yet safe. Feed old statements into a crosscut shredder.

Get started: Bring all your financial and legal papers to one central location to complete this task. Then pull each paper out and toss, shred or file it.