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Finances in 55 Seconds: Organize Your Financial Documents

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File cabinet One of the ways to make things easier on yourself come tax time is to have your financial documents already organized. Happily, this doesn’t have to be a big production. Getting the framework in place doesn’t need to take very long, and once you have things set up, it’s fairly easy to keep with it.

Having a system for your financial documents is a good way to help you access information that you need quickly, as well as help you get everything you need for tax purposes simply and easily. Whether you decide to go old-school, with a filing cabinet, or go high-tech with digital copies of your documents, here is how you can set up a framework for organizing financial documents in 55 seconds or less:

  1. Set up an overall file for your financial documents: This can be on your computer, or in a file cabinet. You should keep very important documents, such as birth certificates and other identifying documents, insurance policy papers, and a list of account names, numbers, web addresses and passwords in a fire safe where they can be protected. There are small fire safes ideal for a grab and go if necessary. (16 seconds)
  2. Figure out how you want items divided: Decide on divisions. You can set up sub-folders on the computer, providing you with an easy way to store your scanned documents. In a filing cabinet, you will need to decide how to label the file folders. Personally, I like to divide mine into insurance, investments, warranties, bills, bank/credit cards, home business, and tax-related. Keeping tax-related receipts and documents in their own folder helps me access them quickly come tax time. (30 seconds)
  3. Make sure the files are secure: You also want to make sure your sensitive files are secure. I have a lock on my financial document file. If you use a digital filing system on your computer, you might want to encrypt your overall file. You should also have some sort of a backup of your files, either on a flash drive that you can keep in your fire safe, or by using an online backup service. (9 seconds)

Of course, if your financial documents are a mess, it might take anywhere from 10 minutes to a couple of hours to organize matters so that everything is properly filed. Getting the framework up and going, though, doesn’t need to take a long time.

How Long to Keep Certain Documents

Obviously, those documents that you need to support your tax return should be kept with your tax return. You can keep hard copies of these items, or scan them to save them digitally. Experts recommend that you keep your tax returns for seven years before disposing of them. Many financial documents, including bank and credit card statements, receipts, pay stubs, and investment statements can be shredded when reconciled, or when new versions come to replace them. If you need them for warranties or or tax purposes, you can scan receipts and statements to save digitally, or keep in a special file for those items.

The documents that you need to keep longest are those related investment transactions, loan documents, vehicle records, titles, original life insurance and annuity policy documents, estate planning documents and retirement plan documents. You should keep these for a long period of time — including hard copies, which should be kept in a safe place. You can scan them for backup, but the originals should be guarded carefully.

(Photo: jessica mullen)

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One Response to “Finances in 55 Seconds: Organize Your Financial Documents”

  1. skylog says:

    good article. i think a good system is key. i do everything in file form on my computer. my only problem is i can not seem to get rid of any of the data. i know i do not “need” X ammount of years of certain data, but i do not see the need to delete it either.


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