This week on my Instagram, I gave you a behind-the-scenes video tour of my office and how I organize my financial clutter. If you are lacking an organized system for all of your financial paperwork, things can become stressful.
You need to have a system in place and create a routine for dealing with your financial clutter. I have found that my organized office and system simplifies my finances, reduces stress, helps me prepare for unexpected events, and gives me more time to do fun activities with my family.
In order to achieve a system that works, you need to identify what to keep, where to keep your financial clutter, and when to update your financial records. If you have a mountain of paperwork, the task of organizing everything into an efficient document-retention process can seem daunting.
All it takes is a one-time deep dive to shred what you no longer need and sort the rest into folders or binders. After your system is set up and complete, just make sure to sort and organize as you go in the future.
In the beginning, it takes a small initial investment of time to shred what you no longer need, but after that, it becomes an easy ongoing process.
WHAT TO KEEP AND FOR HOW LONG
In the beginning, you need to explore and read through the documents you have and figure out what they mean. I tend to be a hoarder when it comes to paper, so I really have to ask myself, “What’s the worst thing that can happen if I throw this out? Can it be replaced if I do end up needing it? Is it something that I might need later?”
Make sure to keep your space limitations in mind. This was hard for me since I moved out of an office that was huge and moved into a space that was very small. What I could keep in my larger office no longer fit in the space that I had. I had to develop some new ways of filing my records and utilize electronic options.
You want to make sure you keep the most up-to-date information and throw out older records. For example, if you get a new homeowner’s insurance policy, toss out the old one and keep the most recent document. This will ensure that things don’t get piled up. If the information is no longer useful, don’t store it.
Doing what you makes you feel comfortable should always be your deciding factor when deciding what to shred and what to keep.
MY LONG-TERM STORAGE SOLUTION
I use a white box hanging-folder organizer to store all of my long-term records. The white version of the box I have is no longer available, but I was able to locate a black option. Long-term storage is meant for documents that you need to keep indefinitely. In my box I have hanging folders for the following categories:
- Social Security Statements
- Bank Accounts
- James (my son)
- Vital Documents
I keep regular file folders inside each hanging folder to organize my records even more. For example, in my hanging folder for my vehicles, I have two file folders for each of one of my vehicles. In my hanging folder for my insurance, I have three file folders for life, medical, and car insurance. I like having a subject and category type filing system for my long-term storage because it allows me to find exactly what I need when I need it.
I use my Social Security hanging folder for all of my Social Security Statements. It shows you the benefits that you’ll be entitled to when you retire. It’s important to check your Social Security Statement so you can accurately assess how much income you’ll need in retirement. I like to check my information and request a statement once a year. You can create an account and request statements here.
I keep copies of important legal documents, such as my will and divorce paperwork in my long-term storage under vital documents.
It’s important to use a system that you understand and will want to use. It doesn’t matter if you file vehicle documents under sub-categories such as maintenance, warranty information or insurance policies or if you file everything under one category labeled for each vehicle you own. All that matters is that you are consistent and choose a system that you are most comfortable with.
MY SHORT-TERM STORAGE SOLUTION
If you will need immediate access to certain documents, they should be kept in a short-term storage location. For me, I use a metal hanging folder organizer to store all of my monthly bills and my past cash spending trackers from my cash envelopes. I organized my short-term storage system and bills by month, and then shred them when I see that the payment clears. For big tickets items, such as furniture, computers, or other expensive electronics, I keep the bill as long as I own the item. You never know when you will need to substantiate the purchase for an insurance claim in the event of loss or damage.
I don’t store my day-to-day spending receipts. I only keep them long enough to update my cash envelope trackers and add them to my expense tracker. Since I use the cash envelope method for budgeting, I don’t use a debit card for my variable spending, which means I don’t have to worry about making sure the correct amount came out of my checking account. Once the receipt is on my trackers, I shred them.
There are some receipts that I do end up keeping. Receipts for business expenses, medical expenses, bigger purchases with warranties, or any donations I make are kept in my long-term storage or in my tax binder.
MY VISUAL BOARD
One of the ways I organize my financial goals is by using a visual board. I like to use charts that show my progress throughout my financial journey. Right now, I am on a massive debt payoff journey, and sometimes with bigger goals, you can get discouraged with how long it’s taking. This has been the hardest part for me so far on my journey.
I am the type of person who likes things done NOW, not later, and having limited control over how long it’s taking me to reach my financial goals is frustrating.
With these charts, you color in a line each time you make a payment or pay off a certain amount of debt. The same goes for savings. I make my own charts in Word, but you can get a lot of free charts just like this from Debt Free Charts. Heidi was my motivation for my visual board, so I need to give her all the credit!
If you need help figuring out how to fill in the numbers or the best way to print your charts, her “How to Use the Charts” blog page helps a lot.
BINDERS, BINDERS, BINDERS
I am a huge binder girl and most of the time I have a binder for pretty much everything. Binders are great for storing similar documents in one central location. The great thing about binders is that they can be used to store more than just paper. There are endless options for accessories – from binder tabs to utensil holders or index dividers to page protectors.
Here is a list of my most-used binders:
- Meal Plan
I am a neat freak, so I like to keep the different pens I use for each binder in clear utensil pouches that I store in the front of each binder. I then organize each binder using monthly tab dividers.
MY BUDGET BINDER
The budget binder I use is my Budget-by-Paycheck Workbook, and I have it organized by month. This is where I keep all of my budgeting, saving, and debt payoff journey information (like updates to my debt snowball). For each month in my binder, I have:
- Blank Budget Calendar for listing my bills on their due dates with their amounts.
- My savings plan for events and holidays.
- Bill tracker for listing which bills I want to pay with each paycheck, listing my budgeted savings amount, and my cash envelope amounts. My bill tracker is essentially my budget since I am a paycheck budgeter.
- Updates to my net worth.
- My debt snowball updates.
I also use my Budget Binder to store and keep track of action documents or things I need to reference soon. If I get a bill that I need to take action on (besides just paying it) I put it in the front cover of my binder so it’s a constant reminder that I need to take action.
The main reason I don’t keep a separate binder or box for all of my action documents is that if it’s not right in front of my face, I will forget to do it. Having them stored in a place that I don’t check very often would never work for me. I check my Budget Binder at least two times a day, and I constantly check the action documents that I store in the front of the cover.
MY MEAL PLAN BINDER
My Meal Plan Binder is the central location for everything food related. I have my binder organized by month and each month includes:
- Pantry, freezer, and refrigerator inventory list
- Monthly meal plan calendar
- Meal plan brainstorming worksheet
- Weekly meal plan
- Shopping plan worksheet
- Shopping list
- Printouts of all of my recipes that I use for that month.
I am a weekly meal planner and I go shopping for my meal plan every Sunday. This means that every monthly tab will have multiple weekly meal plans and the recipes that are associated with each week.
MY TAX BINDERS
I keep a tax binder for both my personal and business taxes. I have both binders organized by year, and for each year I store my tax return, receipts, and any supporting documents that I need to file my taxes.
I really like to keep my tax documents completely separate from the rest of my other financial documents because the record retention is handled differently for taxes. I like to keep all W-2s, receipts, and other supporting documents for my taxes for at least seven years.
Since the IRS can audit you for up to three years after you file your return if it suspects a good-faith error, some people believe you should only keep them for three years. I keep mine for seven years because the IRS can actually challenge your return if it thinks you underreported your gross income by 25% or more. Keeping them for seven years should cover you in either event.
I love utilizing photo boxes in my office for storage and organization. They are small, don’t take up a lot of room, you can use them to store multiple things, they are affordable, and they come in many different designs.
I have two photo boxes that I use to store old cash envelopes from my budget and mailing supplies. Both of my boxes are kept on my office shelf and can be accessed easily. If you have cash envelopes that can be reused in the future, I suggest coming up with a storage solution for them rather than just throwing them away.
When I downsized to a smaller office, I had to learn and develop an electronic system for storing financial documents. I sign up for electronic statements when I can, and I organize electronic bills and payment confirmations into monthly folders that I created in my email.
I keep copies of vital documents such as birth certificates, social security cards, marriage certificate, divorce decree, my will, health care directives, and my power of attorney on a flash drive. All of my original files are stored securely in a locked safe in a different location.
Organizing your financial clutter is only the first step. In order to keep your paper clutter under control, you have to be to tell yourself, “out with the old, in with the new.” For example, when you get a new auto policy, make sure to discard last year’s. When you receive annual investments statements, shred the monthly or quarterly statements that you have been keeping.
Every year, I like to do a deep clean of my filing system and shred anything that’s no longer needed. I also scan my Budget Binder and Meal Plan Binder onto flash drives every year so I can refer back to them if I need them. I then shred the entire binder and start fresh in the new year.
It’s important to develop a routine for filing financial clutter. That means opening mail right away and filing documents in a timely manner. Being organized can help make taxes, budgeting, and other financial projects less stressful and more convenient without a lot of hassle.