A day doesn’t go by that I’m asked by at least three or four people, “Johnny! How do you organize all of your financial paperwork?” Actually, that doesn’t happen. In fact, no one has ever asked me that question. But since I just went through all of our paperwork this weekend and ’tis the season for spring cleaning, I figured I’d shed some light on my OCD ways.
First and foremost, you should know what things find their way into our heaping mountain of unorganized paperwork, what we do with them, and how long they stick around.
IMPORTANT NOTE: Any documentation that is needed to support your tax filings should be kept for 7 years. Disregard the throw-away date if this applies. When in doubt, keep it.
This would include all utility, cell phone, cable/internet bills. When we get bills, we make it a point to take care of them immediately, not unlike Inbox Zero (which you should add to your spring cleaning list). Since most statements are now available online for up to 12–24 months or longer, we opt for paperless billing with most services.
When to throw away bills: 1 year
This has always been a subject of contention in our home. We try to only save receipts for big ticket items, warrantied items, medical expenses, charitable donations, and 1099 (self-employment/consulting/freelance) purchases.
When to throw away receipts: as long as you own the purchase
We no longer receive any paper copies of bank or credit statements. They’re important to have access to, but most banks and credit cards offer sufficient digital statement archives. Should you still receive either, neither of these should collect much dust.
When to throw away statements: 1 month
Having your money make more money is kinda cool. But the accompanying paperwork ain’t. Especially since you’ve got to hold onto these suckers for at least three-quarters of a decade.
When to throw away investment records: 7 years after investment is closed/sold
Auto, home, life, zombie invasion. And with all of those policies come lots and lots of paperwork. We’ve opted to slim down this section by using online policyholder benefit info, and downloading member ID cards straight to our phones.
When to throw away insurance policies: as long as you hold the policy
So now that we’ve figured out which finely sliced pieces of lumber to hold on to, it’s time to organize. Here’s a visual breakdown that keeps some method to our madness:
Our Organization System
After trying out a few different methods, we finally settled on keeping things organized by the amount of time we needed to hold on to them. The expanding organizer ($17, Amazon) is great for everything we need to keep longer than a year. Tax returns, insurance policies, titles, personal documents (marriage license, birth certificates, etc), medical records, etc. It’s durable, portable, and holds a lot o’ trees. Ideally, we’ll buy a fireproof safe in the near future to store some of the more important personal documents.
The brown 12-month expanding file ($11, Amazon) is perfect for filing documents, bills, and other financial-related paperwork throughout the year. Each tab represents a month of the year, which makes it easy to throw March’s water bill into its respective March pouch. Then at the end of the year, we always empty the year’s contents and throw them into the air while jumping on the bed. Or not. We actually methodically take each document out, determine if it needs to be kept or not, and start anew for the next year.
And finally, our friend the blue 12-month check file ($8, Amazon). This little guy makes our yearly receipt organizing a cinch. As mentioned before, we hold on to all big ticket, self-employment related, and warrantied purchase receipts. We also cash all of our checks remotely using our phones, so we store all deposited checks here. And like the letter-sized brown file, we empty the contents at the end of the year and file them in the big expanding folder or trash them.
And that’s how we stay organized.
What’s your method for keeping things tidy? Or do you go for the “put everything paper into that one filing cabinet, take two pills, and call me in the morning” method? Or are you completely paperless and in a constant state of zen?