3 Steps To Organizing Your Personal Financial Documents
I’m tired of all the papers, how do I get this stuff organized?
How do you organize your financial documents? If you don't know where to start, then this blog's for you!
I get it. Your documents are growing, but your space is not. It seems like documents are coming from everywhere- email and mail. You're busy with the 800 things on your to-do list and toss the documents to the side, promising yourself you will organize them. A few months later, you look at your paperwork mountain and become overwhelmed at where to start. I'm here to say you can slay the paperwork dragon without going insane.
THE 3 STEPS TO ORGANIZE YOUR FINANCIAL DOCUMENTS
Get rid of the documents you don't need to keep
Organize your paperwork by categories
Store your documents
See, it's not so bad. So, let's get started!
ORGANIZE YOUR FINANCIAL DOCUMENTS- STEP 1: GET RID OF DOCUMENTS YOU DON'T NEED TO KEEP.
Use this checklist as a guide to help you decide what documents you will keep or toss. For tax and legal documents, consult with a tax or legal professional before tossing the document. For documents with personal information, consider shredding. Check for free shred days in your area.
Remember, the guidance below is only a guideline as to when to toss paperwork. Use your best judgment.
Toss in One Month
This guidance is for non-tax-related documents.
ATM deposits
Credit card receipts
Debit card receipts
Deposit slips
Toss in One Year
This guidance is for non-tax-related documents.
Paystubs until you can compare them to your W2/Social Security Statement
Utilities
Canceled Checks
Credit card receipts
Bank Statements(unless the canceled check is a tax return supporting document)
Mortgage statements
Quarterly Investment Statements, until you get your annual statement
Toss after Three Years
Medical Bills Cancelled Insurance Policies
Home Sale Records
Stock Sale Records
Use the IRS website for guidance specific to your tax situation for records used for a tax deduction.
Annual Investment Statement
Toss after 7 Years
Contact your tax professional for specific guidance
Documents used to support information on returns. As stated before, go to the IRS website for guidance specific to your tax documents.
Annual investment statements
Terminated Insurance Documents
Sold home Mortgage and home documents
Keep while still active
Contracts-credit cards, loans, services, etc.
Insurance Documents
Investment purchase record- as long as you hold the investment.
Property Records
Stock Records
Records of retirement/pensions
Disputed bills
Record of home improvements
Warranties until expired or for the life of the product
Keep forever (Vital Documents)
Marriage license
Divorce decree
Child custody documents
Birth Certificates
Social Security Cards
Estate Planning Documents like wills
Adoption records
DD214, Military discharge records
Records of paid mortgages
Tax Returns
Passports
Education records
Citizenship/Naturalization/Green Card
ORGANIZE YOUR FINANCIAL DOCUMENTS- STEP 2: ORGANIZE YOUR PAPERWORK BY CATEGORIES
Once we've tossed or shredded the documents you don't need, the next step is to organize your documents into categories, so you can easily find them when you need them.
SANITY SAVING TIP: Take your time and organize by categories. For instance, if you have an auto category, organize all of your auto documents first, then move on to your next category.
Below are the main categories and subcategories suggestions. I use a large hanging file folder for my main categories. I then use manilla file folders for each subcategory and put the manilla folders in the large hanging file folder.
Categories/subcategory suggestions:
Main Category: Auto
Subcategories: Titles, Car loan information, Service/Repair Records, etc.
Main Category: Home
Subcategories: Mortgage information/Apartment Lease information, service and repair records, utility bills (if you have them mailed), homeowner association information, warranties, homeowner insurance information
Main Category: Employment
Subcategories: Each spouse's employer information, open enrollment booklets, etc
Main Category: Financial
Subcategories: Banking information, debt information (credit, student, auto, other debt), investments, retirement, financial goal worksheets, etc.
Main Category: Insurance
Subcategories: Auto, Health-Related (healthcare, dental, vision, critical care, etc.), Medical Savings Accounts, Life, Disability, Long Term Care, Warranties, Pet Insurance, etc.
Main Category: Kids
Subcategories School information, progress reports, report cards, school meeting notes, etc. OK, I know this is not financial-related, but I gotta help my moms out!
Main Category: Medical
Subcategories: One for each family member-Medical related receipts, visits, immunization records, etc.
Main Category: Instructions. I dump all manuals in one category, but you can create subcategories for each instruction booklet.
Main Category: Pets
Subcategories: Vet visits, adoption paperwork, receipts of services.
Main Category: Taxes Returns
Subcategories: Tax records by year. I also have a folder for the Current Year’s Tax Information to dump any tax-related documents into that file throughout the year.
Main Category: Vital Records
Subcategories: Marriage, Birth, Divorce, Child Support, Citizenship, Estate, Passports, Military records.
ORGANIZE YOUR FINANCIAL DOCUMENTS -STEP 3: STORE YOUR PAPERWORK
Now that you’ve gotten rid of the stuff you don’t need and categorized the paperwork you are keeping. Now, have a better idea of the type of storage you need.
For paperwork:
I do a combination of folders and binders. I place the documents I don't use often but need to keep in file folders (auto service records, receipts, etc). The documents I often use I keep in binders. I keep my vital documents in a binder.
You can store your vital document binder in a fire-resistant safe or file cabinet. You can also scan and save in encrypted cloud storage with extra security.
For electronic documents:
Create electronic folders based on your documents in your cloud storage, like Google Drive.
IN CONCLUSION
Rome was not built in a day, and your paperwork work won’t be organized in minutes. To recap, the three steps to take to organize your financial documents are below:
Get rid of the documents you don't need to keep
Organize your paperwork by categories
Store your documents
You only have to organize your documents once. Once done, schedule a quarterly review of your records to easily maintain your files. This will go a long way to helping your get financially organized to quit your job to launch your business full-time. If you’re feeling stuck on what to do, consider scheduling a FREE Discovery Call.
