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How-Tuesday: How to Organize Your Financial Documents

So, you’ve finally decided to dive in and get your finances in order. But where to start? It’s easy to feel like you’re bathing in documents, drowning in numbers, and struggling to stay afloat with due-dates and deadlines.

De-clutter
Your Finances | Image source: Shutterstock.com / Photographer: LoloStock

Getting your money-related documents in order, though, will ensure that dealing with your personal finances goes just swimmingly. Okay, enough with the water-focused jokes. Here’s what you need to do to de-clutter your finances:

Equip Yourself with the Right Tools

Just like successfully deep cleaning your home requires the right products, getting your financial documents in order requires the proper tools for the job.

  • Create a space in your home dedicated entirely to finances. Maybe it’s a small corner of your office or a hidden cabinet shelf in the living room.
  • Invest in a few file folders, a small shredder, envelopes, and small boxes or crates, if necessary.
  • Consider how you prefer to manage things in general – physically on paper, or electronically? Then, focus on finding the right money-management system for you – whether it's free printable budget sheets or a blank notebook, web or app-based personal finance tools, or computer-based Word or Excel documents.

RELATED | Free Budgeting Tools + Worksheets | Mint.com | Personal Finance Tools at Your Fingertips

Clean + Simplify

Think of getting your finances in order like doing a thorough reorganization of your closet. What’s the first thing you do? Pull everything out, assess what you’re dealing with, and get sorting. Same goes with your financial documents. Note: You can also apply the tips below to your e-mail Inbox.

  • Make three piles: To Pay, To File, and To Shred.
  • Go through every single document, whether it’s a piece of mail you received last week or one you took care of over a year ago, and place them into the appropriate stack. This includes actually taking more recent statements out of their envelopes!
  • Once you’ve gotten each piece of paper into its proper place, focus on the piles at hand.

TO PAY:

Pay these straightaway. If you don’t have the funds yet or don’t usually pay them until the end of the month, then go ahead and leave them in the TO PAY folder/binder/box and leave that in the most visible and easily accessible area of your personal finance space.

TO FILE:

These documents – statements, bills, paystubs – that you’ll want to hang onto for the next several months or years, are ready to be filed. Break these up and sort them in a fashion that makes the most sense to you. Examples may include:

  • Home & Auto
  • Healthcare & Insurance
  • Saving & Investing
  • Income & Taxes
  • Credit Cards & Other Debts
  • Subcategories for each (for example, if you open future credit cards, each one will need its own folder.)

TO SHRED:

Anything, we repeat, anything with your name, address, or other personal information should not simply be tossed with the rest of the trash. These items must be thoroughly destroyed in order to prevent identity theft.

If you can’t afford to invest in a personal shredder, keep an eye out for free shred days, which are often hosted around the community.

  • Go paperless. Doing this won’t only reduce the amount of paper you deal with, but it will also help prevent identity theft.
  • One of the best ways you can avoid dealing with the hassle of opening, losing, finding, sorting, and shredding all of your paper statements is to rid yourself of them completely. Sign up for mobile and online banking and e-statements, and request to have your bills sent to you online.
  • Another great way to stay on top of your finances is to automate your payments and transfers. You can typically set this up right through your payee on their website. Even better, try online and mobile bill pay through your financial institution, if it offers these options.
  • If you’re concerned about keeping track and holding onto receipts, invoices, and proof of payments, create an Inbox folder for each and move each e-mailed receipt into the appropriate place for future reference.
  • Stop getting all of those pesky credit card offers, too, while you’re at it! Visit Opt Out Prescreenand you can opt-out of them all in just a few clicks.

RELATED | 3Rivers Mobile | Online Banking | Mobile Bill Pay | Online Bill Pay | How Long Should I Hold Onto Financial Documents?

Maintain

Once you’ve gotten everything in its proper place, it’s time to maintain the cleanliness!

  • Sort your mail (including e-mail) as soon as it comes in – into appropriate folders.
  • Set up automatic payments. If you decide against this route, then set calendar reminders on your computer or phone and physically jot down when payments are coming due.
  • Create a new folder or file as soon as you open a new account (loan, credit card, mortgage) and add it to your personal finance filing system.
  • Give your financial folders a quick lookover each month, and a really thorough inspection and update twice a year to keep it all in tip top shape.

Source.

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