This article was last updated on May 6
Is your financial documentation clutter getting too much to deal with? Signs of this include bills piling up, statements in random piles and your desk barely visible under all the stacks of paper. Most of us have, at some point, experienced this and need to get organized. Start now by making “Financial” spring cleaning part of your future using the four simple steps provided here that I myself have followed for a number of years.
1. Assess the situation. Where do you need to focus your energy? One way to get to the root of your organizational challenges is to ask yourself questions like: What are most important financial documents? Which ones do I need to action regularly? Are any over due bills? What do I always have trouble finding? Then think about how you want things to be and identify what your biggest priorities are. For example you need identify overdue bills as soon as possible (asap) in order for you to action them and avoid even more late fees.
2. Make a plan. You don’t have to finish everything in one day – it’s often better to break a big task down into little chunks. However it is best to have the start and end date within a week of each other. Choose one or two “stacks of paper” to concentrate on initially. I would focus on the oldest documents and work backwards (this will help you identify your oldest and possibly overdue bills first). Let people in your family know what you plan on doing and when you’re going to do it. Get them lined up to pitch in if possible. Also get all of the supplies you’re going to need, such as folders, plastic boxes and labels to organize your paperwork, and trash bags for the junk (you may want a shredder for confidential documents). Taking all of these steps ahead of time will keep you on track and make your spring cleaning project feel more manageable.
3. Sort & Organize. There are three general categories that just about all the financial documents fit into: For Action, To Keep, and Throw Away. Now assess all your documents and put them into one of these categories using some of the guidelines below:
– For Action, is any thing that needs to paid or income (checks) that need to be banked. I suggest getting a two level “in or action tray” for your items to action. The top level is for things that need to be done asap, while the others can be done within a month. This will help you prioritize what needs to get done and which bills need to be paid first.
–To Keep, is generally any document which you may need to reference in the short to medium term (which you cannot easily get elsewhere) and legal documents (like car titles or property records). You may also want to keep the first and the last 2-3 months utility bills for proof of residence purposes. Some people also like to keep receipts of purchase and medical receipts. I suggest a small plastic box for this, so that everything is in one place. Also, get all your bills, statements etc online if you can! This will really reduce your documentation clutter and provide a quick way to access the information. From a legal perspective, online bills and receipts are as good as the hard copy versions.
– Everything else should go into the Throw Away box. Because you may inadvertently put something in the Throw Away box, don’t get rid of immediately. Put the box in your garage or under your desk for a period of no more than two weeks to a month. If you don’t find that you go to the Throw Away box after a month, get rid of it permanently.
4. Stay on top of it. Sometimes this can be the most challenging step of all, but the only way to get organized and stay organized is to stick with your system. From experience I have found you only need to set aside 1 hr a week (which you can split this into 2 half-hour sessions) and to manage your financial documentation clutter using the system in Step 3. All this effort will really pay off during tax time when trying to get all your documentation together.
And remember, if your system isn’t working, change it. Different things work for different people – the main purpose is to be organized and feel on top of things. No organizational system will be successful if it’s hard to follow.
Don’t wait any longer. Get control of clutter and get organized today.