Do you live with stacks and piles of papers scattered like confetti all over your home? This usually happens for two reasons: you have been avoiding the decision making process and/or you haven’t created a specific spot for each piece of paper you know you must keep. The fix is a fairly straightforward one: you need to create a working file system. Oh and you also need to use it!

Here are some quick tips taken from “One Year to an Organized Financial Life.”

Set a timer for 10 to 20 minutes and do a speed elimination of all the papers you know in your heart you no longer need: expired coupons and invitations to events long past, non tax deductible miscellaneous receipts, old newspapers and magazines and true junk mail just to name a few of the most common items that fill an office or work space at home. Whether you trash or shred, get this debris out of your space. If you come across items that need to go to other people (family member, insurance broker, tax preparer et al) just set them aside. You can deliver when you have completed your files. Do not allow yourself to get lost in old material. The key word in ’speed elimination’ is speed!

Be on the lookout for material that can be archived. This might relate to your income tax deductions for years you have filed or to a work or volunteer project now completed.

Next start sorting your papers by category. It is from this world that your file names will appear. Most of us have receipts for the following categories: medical expenses, rent or mortgage payments, business expenses, home office receipts and automobile expense. Your categories will be unique to you. Make a list on paper and see how you can streamline the file names. For example, why not have a file category called: ‘Insurance Policies.’ Here as an example you can group Automobile, Homeowners and Medical policies.

Your basic supplies will include: hanging file folders, manila file (these hold the material and get stored inside the hanging file folder), long tabs (so you have room for creative fie and category names) and of course a label makes with extra cassettes.
This is enough to get you started. You’ll find detailed step by step instructions in all of my books. Russell Wild and I also included a document retention guide. For example you will want to hold on to your actual tax return indefinitely. The ‘back up’ material need only be saved for 3 years if you are an individual or 7 year if you are incorporated. Be aware however that these are the Federal guidelines and that each state imposes it’s own time regulations. As an example, the state of California asks that you hold your back up material for 4 years if you are an individual. It’s always best to check with your tax preparer or tax attorney for THE latest guidelines.

It takes a few hours to set up a file system but it will save you time and energy all year long!

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