How To Organize – Set up a Filing System

An important part of being in control of your finances is being able to keep the records you need. You have to do more than keep them, though. You have to know how to organize them so you will be able to find them when you need them. Organization is vital to keeping your financial records in order.

Setting up a working filing system is the best way to keeping your records organized. With well-labeled files and a neat place to hold them all together you will be on your way to a streamlined method of accounting for your finances. You won’t have to dread looking for the receipt and warranty paperwork from a major purchase because you’ll know exactly where it is.

Six easy steps are all it takes to get a working filing system up and running:

Step 1: Sort the papers you have now. Make piles of similar types of records (one pile for electric bills, another pile for your 401(k) statements, etc.) and discard anything you don’t need.

Step 2: Make folders for your categories. I tend to lean toward the idea of making a lot of folders. It’s easier to find things if I can narrow down the number of things that go into that folder. You should, however, choose a system that works for you. Maybe you don’t mind having the all of the utility bills in one folder.

Step 3: Use color to segregate your categories. This can be as easy as sticking blue stickers on the tab of one category’s folders and red stickers on another. Or you could go the extra mile and get different-colored folders for each category. The important part of this step is to find a way to differentiate your varying types of records. You might use green for assets, your bank statements and retirement account statements. You might use yellow for warranty information. Red might be good for expenses like your credit card statements or mortgage statement.

Step 4: Group your folders together by category. This is where the color comes in handy. Once you start putting your folders away, you’ll be able to quickly tell when something is in the wrong place. One lonely blue folder stuck in a sea of red folders is sure to catch your eye.

Step 5: Store your folders. If you have access to a filing cabinet, use that. But if you don’t, there are a couple of other options. You can buy one of those metal systems that allow you to convert a regular drawer into a filing space. (Pay close attention to the dimensions of your drawer as you select one of these systems.) Another option is to buy one of those mobile filing systems. Unfortunately, these don’t always hold a lot of files, so you could need another one pretty quickly.

Step 6: Use your system. Avoid the temptation to keep piling papers on your desk or table; now that you have your files set up, you can easily drop each statement or invoice away as soon as it has been reviewed or paid. By taking an extra minute to put things away the first time you handle them you can avoid having a mountain of filing at your desk.

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