I don’t like clutter at all, but it’s oh so easy for stuff to build up and get out of control – especially when it comes to paper. If you really like everything to be neat and tidy – but you don’t want to spend your life managing the mess – read on.
The problem with paper
I dream about going paperless. But the fact is that there are still occasions when I need actual documents to prove my existence, prove what I’ve earned, or prove that I spent my hard-earned cash on whatever.
The problem with paper records is that they come in one at a time, from different sources. That means that they could end up in my car, my wallet, my jacket pocket, or my desk at home. Making sure they all end up in a central location that keeps them safe and still accessible whenever I need them is a bit of a chore.
Decide on a system
What works for me is a system of three sets of folders: monthly, topical, and important documents.
I have three areas for my records too: a small filing cabinet for the files I use regularly, small plastic filing boxes that I usually keep in storage, and a fireproof safe that I can grab in the event of an emergency.
Monthly folders for receipts
The heart of my filing system is the monthly folder. I have one folder for each month, and it’s super simple. Here’s what I throw in there:
- Anything related to income – paycheck stubs, bonus statements, refunds, reimbursable expenses, checks deposited by phone.
- Anything related to expenses – receipts for groceries, incidentals, gifts, purchases.
- Anything I just want to associate with that month.
Whenever I have downtime or just want to get rid of the clutter on my desk, I spend a few seconds to grab whatever receipts or documents I’ve collected, sort them by month, and put them in the corresponding folder. That’s it.
Topical folders for easy reference
There are some documents I don’t want to keep in the monthly folders, though. For example, I like to keep all the maintenance records for our car in a single folder so I don’t have to search through all the monthly folders just to find a particular receipt. I set up topical folders to keep certain records together so that I can refer back to them easily.
I devote sections in the filing cabinet just for topical records folders that relate to each other. Even though they’re in separate folders, I keep the car purchase documents, the loan statements, and the maintenance records together in a particular section.
You may want to devote a section to your medical insurance records, investment statements, school records, your children’s sports activities – anything you want to keep together in one place because you may need to refer to it this year, next year, or even a few years down the road.
Here are a few special topical folders that I keep in addition:
Bills to be paid
Some bills that come in the mail may not be due for a few weeks or months, so I have a special folder just to keep any bills I have yet to pay together in one place and off my desk. Some examples are the car registration, a license renewal, a dentist bill, or the gardener’s monthly statement.
I make a separate file folder to keep anything that is important for that year’s tax return. Then when we prepare our taxes, the actual returns are also put in the hanging folder in front of that year’s monthly receipts files.
I made copies of everything in our wallets and keep the folders in the topical folders section. That way, if one of our wallets (or anything in them) is lost or stolen, I have the correct contact information within reach. Here’s what I keep a copy of:
- Driver’s license
- Debit cards/credit cards
- Medical insurance cards
- Hotel loyalty cards
- Grocery reward cards
- U.S. passport
Yearly file storage
Every year, I move the monthly folders and tax folders into a plastic filing box and put them in storage. I used to keep them in a larger plastic bin, and I could keep something like five years of records in one box. But it didn’t really work well for me because the larger bin was too big, heavy, and unwieldy. Yes, they were out of the way in storage; but if I needed some of the records, I had to get all the records.
In the end, I decided that smaller plastic boxes would be easier. I wanted to keep all the records for the year in one little plastic box so I could just grab the year I was interested in and leave the rest in storage. But I couldn’t find exactly what I wanted, so I opted for a larger size and now keep two years’ worth of records in each box.
The larger size is still a little too big, so I decided to keep other things with the records — like Christmas cards that have family photos and other mementos of things that happened during the year. You can take organization even further by creating a list of each box’s contents if you want to, but I haven’t spent the time to do that because the contents are fairly consistent year to year. But I still think it would be nice to have each year’s records in its own box.
This is the most important part of the system. I keep our most important documents (the ones that I need access to from time to time) in a fireproof safe. It’s heavy, but it can be carried.
It contains more than documents at the moment, but the important documents are things like our certificate of marriage, Terry’s DD Form 214 from the Navy, and other files we think are important or difficult to replace. We keep it near an exit so we don’t have to go far to get it in an emergency.
You may want to keep important documents in a safe deposit box if you don’t need access to them very often.
Decide when to let go
A good filing system includes a plan for when to dispose of records too. I haven’t done this yet, but I want to start giving each file an expiration date so I know when it’s okay to discard or destroy the documents.
When you’re adding to a topical file, for instance, think about whether you need to keep every …. single … document in the first place. Do you need to keep all of the declarations pages for your auto insurance since the inception of the policy or is it enough to keep the most recent page? Maybe you decide to keep a year’s worth or the last five years or whatever.
What you need to keep – a simple checklist!
Everyone is different, so it’s not easy to come up with a hard-and-fast list of all the documents you should maintain. But generally, you should keep documents that help you prove your income and how you spent it, documents that help you manage your finances, documents of legal significance, medical records, and things that are important to you or of interest to you. [In case you scan your documents and receipts, here’s the IRS Revenue Procedure 97-22 (PDF). The rules about electronic receipts start at page 9.]
Here’s a simple checklist to get you started!
Basic documents to keep:
- Birth certificate
- Social security cards
- Property deeds
- Car titles
- Loan records
- Lease records
- Banking records
- Credit card statements
- Investment records
- Tax returns
- Income and expense records
- Medical records
- Auto, life, and home insurance policies
- Major purchase/repair documents
- Owner’s manuals
- Education records
- Employment records
The tools I used
Most of my records are 8 ½ x 11 or smaller, so all of the manila folders and hanging folders I use are letter-size. And I love labels, so I use full-cut manila file folders that let me slap as many labels as I want across the top of the folder.
And I love it when my labels are printed and look professional. I still use the Dymo Twin Turbo label maker I bought years ago when I had my own company. It’s certainly not a necessity, but it makes me happy. I also have a bunch of Smead color-coded alphabetic labels left over, so I use them too. Again, not a necessity, but I really appreciate the year stickers. That tells me at a glance which year’s receipts are in a particular folder and/or how many years I’ve had a particular account (because I keep adding each year’s label to topical folders).
The color-coded labels tend to lose their adhesion and come off, so I put a Smead clear label protector on the folder as well. It keeps the labels from lifting off the folder and it keeps them clean as well.
I use Pendaflex hanging folders in different colors as a cue so I can easily see where the different topical sections in the filing cabinet begin and end. I like how the plastic section labels can be moved so they’re all on the right side, the left side, the middle, or anywhere in between. Again back to the labels, I use the P-Touch label maker by Brother to make the tabs stand out.
What doesn’t work
You’ll know if the system you set up doesn’t work for you – because you won’t use it! Start with the end in mind. Think about why you need these records and how you use them. Then think about your schedule — how your day goes, how your week goes, and what you do seasonally — to help you find convenient times to keep your filing system up to date.
Files with metal fasteners
I don’t use metal file fasteners anymore. I used to love having everything in a folder be all neat and orderly, but I don’t have time to punch holes in the documents and fasten them in chronological order anymore. I just throw them into the monthly file and I’m done with it. If I have to find something, it’s not hard to sift through a month’s worth of receipts to find what I need. After all, there are only 12 folders to go through, and I usually know which month I’m interested in anyway.
If I decide to keep multiple years in one file, I like to separate them with binder clips instead of paper clips. Paper clips tend to catch on other pieces of paper in the folder making it easy to lose a document in the wrong group. If the group of documents gets too big, I separate them into smaller sections – like maybe separate months.
An inbox doesn’t work for me. It’s easy for things to get buried in a pile documents. In my way of thinking, an inbox that sits on the desk is where documents go to die. However, I don’t mind a vertical file holder sitting on a desk. At least that way, the folders are visible.
What I need to do next
Buy a shredder. I need to get rid of old documents, but I don’t want to just load up the trash bin with our personal information.
Organize my computer files. I’m hoping to get a new computer soon, and I want to set it up so my important computer records are secure too. My next task should be to get rid of the old documents on my existing computer before I transfer files to a new computer.
Paper records can be a nightmare to manage, but over the years I’ve developed a system that makes it a lot easier to maintain during the year. I usually make time in September/October to get the next year’s files in order so that I can enjoy the holiday season and still be fairly organized when tax season rolls around.