Simple Steps to Organizing Your Financial and Tax Papers

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Simple Steps to Organizing Your Financial and Tax Papers

April is the month that you will see kitchen tables across this country piled in papers prepping for tax time.

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It is easy to fall behind on organizing your financial and tax records during the year due to our hectic schedules. If you are unorganized when dealing with your finances, you are at risk of losing control of your money. Keeping your financial records organized is as easy as three simple steps.

  • Make a gathering spot for your paperwork. As your financial documents arrive at your home, make a habit of having a temporary catch-all such as a file box in a convenient location so items can be filed away immediately. This file box should have a handle so it can be easily moved to another room or hidden away in a locking cabinet. Label seven hanging file folders: Receipts, Bills, Action, Taxes, Shred, File short term, File long term. If you have other major categories, create more hanging folders as you need them.  When you have a gathering spot and a home for all of your incoming financial papers, you will never end up with piles scattered around your home.
  • Process all paperwork weekly. Now that you have a gathering spot for all incoming financial papers, you must make a habit of processing all of them on a weekly basis.  Clear out everything from the box each week. Make sure that you are not busy dealing with any item that should have been deposited in the trash the moment you opened it.

Here is a more detailed description of the seven files in your box:

Receipts - This is for all paper receipts. Make sure to have receipts emailed to you when available. Make a folder in your email labeled “Receipts”. Receipts come in handy when reconciling finances each month.

Bills - This is for monthly paper bills until they are paid. Then transfer them to “file” or “shred”.  Many of your bills can go paperless if you switch to online bill pay with your bank.

Action - This is for anything you need to do. Examples would be reading a letter, researching an offer or responding to a request.  Once completed you can file, toss or shred.

Taxes - All tax related transactions go in this file so that you do not forget to include them at the end of the year. These items can be scanned into the computer, filed in “long term” in a filing cabinet, or left in the file box till the end of the year.

Shred - This file is for anything that has been completed and has sensitive information on it.

File Short Term - Items you want to keep short term and have quick access to like loan statements or insurance policies will go in this file.  A three ring binder with plastic sheet protectors can be used for filing these items. Remember try to get many of these items sent to you electronically.  If you prefer to skip this step, these items can be placed directly in the “File Long Term” folder.

File Long Term - This folder will contain documents that you will keep long term. Examples of these items are legal documents, warranties, education records and anything else where a digital version is not available. File these items into a filing cabinet with manila folders labeled for each main category.

  • Purge Your Paperwork. Time to destroy everything in your “Shred” file. Shredders are inexpensive and are a necessity in your home in order to avoid identity theft. In addition, each year make a habit of shredding unnecessary documents and purging your filing cabinet. Look online for information on     which documents to keep and for how long.

Pledge to make this your year to get your finances organized! You will feel more in control of your finances, be prepared for tax season, and be able to make better decisions to improve your personal finances.

Karen Duncan, Certified Professional Organizer®

Productive Environment Specialist™

Organized Home / Organized Office