Establish a regular system for all your important
paperwork to save time and money.
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| Paperwork (Photo credit: Sean Rogers1) |
Ever missed the window on a money-back rebate or paid a steep price for accidentally skipping a credit card payment? Then you know that disarray can cost you. This month, organize your paperwork once and for all. The system described below can help you easily locate your records when you need them, reduce your chances of identity theft, and simplify filing come tax time.
STEP 1: Create a file system for this year's financial records.
Keep credit card and insurance statements as well as sales receipts here—but only for the current tax year. Everything older should be tossed, stored with past-year tax documents or put in a permanent file.
What you will need: Manila or colored folders, hanging file folders with stick-up labels (including several with a wide bottom for large files), and a drawer or file box.
The easiest way to avoid overdrawing is to pay all of the bills that come due within your pay period at once. If you pay online, the bank will subtract the funds, leaving you to spend (or save) whatever you have left over with no worries.
Get started: Designate hanging files for the following categories: banking, business, cars, credit cards, household, income, insurance, investments, kids, legal, medical, warranties and miscellaneous. Inside each hanging file, include several manila folders that fit within that category. For example, keep folders for each vehicle in the cars file, including all the current paperwork for payments, insurance and maintenance. Don't sweat the categories: Do what makes sense to you. You can always make changes.
STEP 2: Put together an action file.
Think of this as your running to-do list. Store pending bills, statements you need to review for accuracy, recent receipts and anything else requiring action until you have time to read them and reconcile or file them.
Get started: Label your folders Bills to pay, To do later, To do this week, To file, To read and To shred. Stash these folders someplace accessible so you can drop in just-arrived credit card offers, that afternoon's receipts, the fund-raising request for your daughter's Brownie troop and similar items.
STEP 3: Maintain your system.
Set aside enough time on a regular basis to go through each item in your action file. This is an important step; do it consistently so nothing slips through the cracks. What you will need: A calendar, your files and a block of time.
Get started: During your session, pay any bills that are due, balance your checkbook, reconcile receipts with your bank or credit card accounts, file your papers, check items off your to-do lists and shred papers you no longer need. Don't forget to empty your "To do this week" folder and move up items from your "To do later" folder.
STEP 4: Organize your remaining files.
Aside from permanent vital records and tax documents, you don't need to hold on to most of your paperwork for more than a year. Audit your existing files to find a place for everything.
What you will need: A file box will suffice for old tax paperwork. Consider a locked filing cabinet to keep permanent documents, such as passports and property titles, accessible yet safe. Feed old statements into a crosscut shredder.
Get started: Bring all your financial and legal papers to one central location to complete this task. Then pull each paper out and toss, shred or file it.
More tips for ultimate organization
Designate a command central: Choose one place to store your financial paperwork. It doesn't have to be a filing cabinet. If you prefer working in a kitchen nook, use a portable file box.
Stay on schedule: Maintain a regular routine so you don't miss critical deadlines.
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Daily: Place your mail in a spot you've designated. Put all the
financial papers (bills, credit offers, coupons, bank statements) in your
action file, the garbage or the shredder.
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Weekly: Dedicate at least a half hour to a finance update in which
you clear your financial to-do list.
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Monthly: Spend 45 minutes on file maintenance. Sort through
bulging files for reconciled statements that can be shredded.
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Annually: Review all your policies, long-standing accounts and
will. If there has been a birth, death or divorce, consider updating your
beneficiaries. Check for outdated terms and premium costs that seem too high.
Put a note in your "To do later" file, and set aside time to
investigate these items further.
Keep (or toss) important documents: Having an overstuffed filing cabinet makes it harder to stay organized.
Make a treasure map: In case of emergency—your house catches on fire, say—make sure you have a single file with copies of identification documents, lists of accounts and other need-to-know information that can help you reconstruct your financial affairs.
Download and complete the free vital documents map at juliemorgenstern.com/downloads.php; store one copy at home and another outside the house for safekeeping.
The information contained herein represents the opinions of a third party and does not necessarily represent the opinions of Mercer HR Services, LLC or MMC Securities Corp. and are unaffiliated with any of the entities referenced above.
Adapted from the January 20, 2012 issue of All You. © 2012 Time Inc. All rights reserved.
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