Organizing Financial Documents

Answer 1

It’s that time of year when many people turn their attention to spring cleaning. Maybe that’s you. Or maybe you made a New Year’s resolution to finally get that filing cabinet in order. Either way let’s talk about how you can organize your financial documents. Like it or not, each individual household operates a lot like a business. There are inflows of revenue and outflows in the form of various expenses. Many of these transactions generate paperwork – lots of paperwork. You might find paystubs, investment statements, bank statements, bills, and marketing pieces all crammed into the same place. The best way I’ve found to deal with this problem is to create several categories and then organize all the paper into one of them. They might look something like this: • Things to keep forever • Things to pare down • Things to toss • Things to shred before tossing • Things to digitize/shred/toss Yes, there are things you will want to hold onto forever due to either their financial, legal, or sentimental value. This group should not be that big. There are things you’ll want to pare down. Credit card statements, bank statements, old utility bills – it’s important to hold onto recent history but do you really need statements from a year ago? When cleaning out my files I usually keep the last three months of statements and paid bills. The rest get shredded. Be careful not to put things into the trash, though, that could be used by identity thieves to hijack your financial life. Shred anything that has personally identifying information on it. I know dealing with all this paper is worse to most people than cleaning out the garage. If you create these categories and resort to sorting a little at a time the task of organizing all your financial records can become a breeze.