Nearly everyone has that drawer or cupboard: the one where all the receipts and financial documents get collected, until the pile seems like an insurmountable mountain. Although organizing all those papers may feel daunting, it’s a great step to take toward getting your finances in order and becoming a stellar money manager. If you’re looking to de-clutter, here are a few tips to get you started.
Centralize your receipts and documents.
Many people have multiple areas where financial documents start to accumulate, from your car’s glove compartment to a junk drawer in the kitchen. To make financial organization easier, decide on a specific location for all receipts, bills, and statements, and start moving that paperwork there.
Create a file system based on budget categories.
Before you begin organizing, make a list of categories and subcategories and assign a folder for each one. A part of that system might look like this:
– Personal loan
– Student loan
- Credit cards
– Visa or Mastercard
– Gas card
– Department store card
- And so on . . .
After your file folders are created, start going through your centralized stack and putting each receipt and statement in its proper place.
Know what to toss – and when.
Unless you need to keep receipts for taxes or expense reports, many documents have an expiration date. Clear some room with these general guidelines:
- Check pay stubs against your W-2, and if it’s a match, you can throw them away
- Canceled checks can usually be saved for three years, but those related to taxes or a business should be kept permanently
- Discard any receipts for items you no longer own, unless you need them for taxes
- Credit card receipts can be tossed after you’ve compared them to your monthly statement
- According to the Internal Revenue Service (IRS), any tax return documents should be kept for seven years
Shred what’s being discarded.
Your financial documents often have an abundance of sensitive information, so be sure to put them through a shredder before throwing them away.
Although it takes some time to get all documents in order, you’ll be on a much better track once you have a system. From here, you can set financial goals and create an organized budget, which leads to getting control of other areas like credit, insurance, savings, and retirement. A little bit of organization today can go a long way for your financial future.
For more strategies, download our free Financial Basics Made Easy e-book, which includes a monthly budget worksheet with categories that can help your de-cluttering efforts.
Do you have any de-cluttering tips to share? Sound off in the comments!
Consider going digital.
Storing your documents digitally can go a long way toward clearing up your junk drawer. Here are some tips for electronic storage:
- Many online tax prep programs give you a copy of your return in PDF form, which you can then store safely on an external hard drive that you keep in a safe place such as a fire safe
- Use a scanner to save images of your bills and other financial paperwork
- Sign up for online statements and online billing wherever possible to cut down on mailbox clutter
- Always be sure that your digital documents are secured by passwords or stored with a reputable online backup service