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How To Organize Electronic Financial Documents

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Document Storage!It’s always tricky remembering how long I should keep financial documents so recently I began cheating by electronically scanning all my documents to my hard drive. I was able to save all the documents I really didn’t need, but was apprehensive about shredding forever, and created electronic backups for the documents I knew I should keep. It was the best of both worlds.

The end result, though, was a collection of poorly organized files. To help me create a system, I began reading online. When the NY Times Bucks blog talked to Alicia Rockmore, co-founder of Buttoned Up, she recommended a year-based file system.

“Have one file for everything that is tax- or finance-related per year,” she said. Then, download electronic records available online to the files and scan in paper copies of other documents as well.

While the advice was a good start, I thought it lacked depth, which may have been intentional. The best filing system is your filing system, one tailored to your needs and tendencies. If you prefer a year-based system, use a year-based system. If it’s easier for you to find and file documents based on asset, you’ll want an asset based system.

Filing System

I started with a filing system that mirrored our paper system and it soon evolved to something a little more robust. For our electronic files, we categorize them based on the asset the documents are related to. For each asset, we then use a year-based folder system for regularly scheduled documents, like statements, and put multi-year documents in the root folder.

When I need a document, my mind immediately thinks about what that asset the document “belongs” to. If I need my homeowner’s insurance, I don’t think “insurance document,” I think “my house’s insurance.” So in that case it makes sense for me to put the policy in with the other documents for the house, like mortgage statements and settlement papers. If you think “insurance document,” then you should put it with your insurance documents, such as life insurance and auto insurance. Our auto insurance is with our car and life insurance would be with Personal (or maybe legal, I suppose we will decide when we get there).

File Folder System

For example, here is the file structure for the top level directory (labeled Personal Documents):

  • 2003 Toyota Celica
  • 2005 Honda Civic
  • [Address] Home
    • Archive
    • 1st Mortgage
    • 2nd Mortgage
    • Property Taxes
    • Homeowner’s Insurance
    • Settlement Documents
  • Archive
  • Financial
    • Archive
    • Bank Statements
    • Broker Statements
    • Credit Cards
    • Credit Reports
  • Legal
  • Medical
  • Personal
  • Rebates
  • Taxes (year-based)

Many of our folders are pretty sparse. Our legal folder contains two documents, a red light camera ticket and a speeding ticket in North Carolina, and our Medical files just has scans of some recent blood work. Rebates is really a reminder system, containing pending rebates (it’s empty now), while Personal is a catch-all folder for things with no other convenient label, like scans of our passports and driver’s licenses. As we acquire more documents and our financial situation gets more complicated, I’m sure this system will evolve to meet our needs.

Backups & Encryption

Our electronic documents are stored locally on my PC as well as backed up on a portable hard drive and a network attached storage device. Since this information would be bad news in the wrong hands, both are encrypted with TrueCrypt, a freeware application that encrypts my data with 14-round 256-bit AES encryption. It also has steganographic features too, meaning it takes your data and hides it after encryption so it looks like random data, so that people don’t even know it’s there. I haven’t implemented that yet but I’ll be taking a look. 256-bit AES is strong enough that it can be used to protect classified information up to the Top Secret level, I think that’ll suffice for now. :)

If you’ve done any electronic document storage, do you have any tips or tricks? How do you organize your electronic financial documents?

(Photo: mucio)

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30 Responses to “How To Organize Electronic Financial Documents”

  1. BrianC says:

    I’ve recently started scanning documents and downloading others. So far, except for taxes, I organize by financial institution, and within each heading everything is organized by date. Thanks for your encryption info!

  2. Safeway_Sage says:

    That seems like a good plan Jim. My question is what kind of scanner are you using and what format are you keeping your scanned documents in?

    Have you ever considered using an online backup system for your documents as well?

    S_S

  3. otipoby says:

    This is a great tip – one that I always think about doing, but never get around to actually doing.

    Also, if you use Quicken (you do use Quicken, don’t you), you can scan your bank statements directly into Quicken.

  4. CK says:

    What happens when your house burns down?

    • Jim says:

      If it utterly and completely burns down with everything inside destroyed? Then I’m screwed, but the most important documents, the insurance policy, will still be on file with my insurance so I’ll be fine there. For other things I don’t really have much I need on a day to day basis, I’ll just put it back together.

      • CK says:

        Encrypting and throwing it online occasionally is a a good backup. You can store files on google docs for free.

    • not given says:

      Back up your scanned docs on a flash drive on your key ring and take it with you or do it on two and keep one at work and trade them every week.

  5. Marc Bautis says:

    What type of scanner do you use. I have been looking into the NeatDesk scanner but have seen some bad reviews

  6. Shirley says:

    This is the way I use Excel for credit cards:
    Name of spreadsheet will be name of credit card and year (CU Visa 2010)

    Two pages (tabs named 2010 and current)
    “2010″ sheet has columns named Date, Payee, $, Purpose, Online Conf #.
    Months are separated with a brightly colored row showing the same info.
    “Current” sheet has the same columns, plus one titled ‘not in’.

    “Current” is filled in as transactions are made and I check the account online weekly to move the $ amount from ‘not in’ to $ column. (This also serves as a security check.) Rows here are separated (by either bold lines or colors) into categories, ie: Gas, Car Repair, Groc, Rx/Vitamins, Household, Restaurants, Monthly Bills, Misc.
    * To the right of each category is the title and total amount in its $ column. This makes a quick total for my Budget spreadsheet.
    * The bottom two rows (first for text, second for $ amount) show ‘Online balance posted to date’, ‘Shown here’, ‘Difference’, ‘Not in’, and ‘Total’. Because the last four auto-sum, it is a quick sight-check for errors.

    “2010″ is filled in (copy-paste) from the ‘Current’ sheet at the end of the month (or billing period) after a payment is made. I consolidate like items (same store) into one total per line.

    Once this is checked for the same total as on the ‘Current’ sheet, the latter can have the dates, $ amounts, etc. cleared and be ready for the next month.

    As an added effiency for me, I also have the links to my login screens for utilities, etc. that I pay online on the bottom of this sheet beyond the print area.

  7. Anthony says:

    Sadly, all of my important documents are paper-based right now, despite my willingness to be digital in everything else (pictures, music, movies, etc).

    I’m curious if something like Google Docs is safe and convenient enough for holding these important documents?!

  8. Andrew says:

    Every year or less than that I scan documents from my filing cabinet or save electronic statement to My Documents folder, which is stored on my Home server with redundant mirrored hard drives. Once weekly I upload automatically to Amazon Web services using Jungle Disk for around $15/month.
    For the regular home user I recommend using Mozy backup or similar for $60/month. That way if your house burns down, or the computer is damaged or stolen, you can still recover your data. It would take a lot less time than reconstructing the data after the fact.

  9. cubiclegeoff says:

    Good post. I really should start doing something like this, I just can’t find the motivation.

  10. Posco says:

    I scan to multi-page TIFF (300 dpi, black and white dithered). I also download banking and credit card statements in PDF and store them in the same hierarchy.

    My hierarchy is yearly at the top level. Then the second level is by “subject” such as banking, credit-cards, auto-insurance, medical, stock-market, and other topics that are helpful to break-out for tax time.

    I dislike directory hierarchies more than 3 levels deep. If there are multiple accounts within the second level (e.g. multiple credit cards), then I use the filename to distinguish. For credit cards, the filename is “Institution-LastFourDigits-StatementDate.pdf”

    Good job with TrueCrypt! I also do the same. My TrueCrypt disk is 680 MB, for easy burning to CD for remote backup. I wouldn’t consider backing up with an online service, since some of this is sensitive data.

  11. jsbrendog says:

    i should probably start doing this. I have all my tax returns in their yearly labeled envelopes inside a plstic folder. That is the extent of my organization currently…

  12. Keith Morris says:

    Interesting post. I’m also curious about your position on online storage. Do you consider it too risky?

    Do you also keep a home inventory for insurance purposes? If so, what system do you use to track that?

  13. Chris says:

    When scanning, I name my files in the following format: YYYYMMDD electric bill.pdf, and place in one big file folder. I OCR by documents so I can search for embedded text so that the filename/directory really isn’t that important. With windows searching, you can easily search through for the comcast related PDF documents, for example. I simply back my stuff up to a $50 usb hard drive. Annually, I zip them up (encrypted with a password) and send them to my yahoo email account, so I have them there in another backup area, if all else fails. It’s easy to isolate the files, just sort by file name. I enter the date of the document date (ex. comcast bill printed on 20100116, not the actual date i scan).

    Good luck to everyone!

    I am all for making my office paperless and the OCR comes with many scanners these days, which makes this really simple to do (scan and OCR all in one shot, outputting to PDF file).

  14. zapeta says:

    One thing I do is backup my important documents to a flash drive and keep that in my fireproof safe. If we have a fire that destroys my computer, I will at least have a good chance of having a working backup.

  15. Great suggestions. So many people don’t properly backup their files nor organize them to know where to even find them. I like the suggestion by sapeta to put a backup in a fireproof safe in case a fire does happen.

  16. ziglet19 says:

    We recently made a backup hard drive and took it to our safe deposit box. If I can get in the habit of taking a backup to the safe deposit box twice a year, I would be happy with that.

    • ebekele says:

      that’s what I do :) I use cd…

      • Abesha says:

        Be careful using CDs/DVDs to back up your data. CD/DVDs usually have a shorter life span. They are sensitive to the environment so I’d rather use a flash drive to store a back up of my backup. :) – Yager lij

  17. Laura says:

    I scan items,put them on a 16gb thumbdrive and keep that thumb drive in a firesafe at home. I also have a back up thumbdrive with the same info stored on it that i keep at work.

    I have a seperate thumbdrive that I keep archive of all my photos too. Im an avid photographer who travels a lot and I would hate to lose them!

    Eventually, I’d like to move items off the thumbdrives and put them on a 250gb drive and just keep THAT in my firesafe. but right now, this seems to be working. ;-)

  18. ziglet19 says:

    I don’t know if this is worth mentioning or not, but I remember reading about it after some wildfires here last year – keep in mind that a fire safe will indeed keep things from burning, but they can still get darn hot and things may melt in there. I remember reading about a photographer who had a bunch of film in his, but it got so hot, the film all melted. I have no idea if a thumb drive might melt…

  19. eric says:

    I am especially loving the TrueCrypt suggestion. Huge fan of the program.

  20. Fontaine says:

    Here’s what I do (very similar to others):

    I keep everything organized in a similar way to Jim…folder structures etc. Everything is under one folder named ‘Records’ (for example.

    First place it’s stored is on my local hard drive.

    Second place it’s stored is on a thumb drive, encrypted with Truecrypt, and in a fireproof safe.

    Third place I keep them stored is with Mozy.com. Free 2GB account is plenty of space for storing documents only (I don’t back up anything else with Mozy). Plus, I use my own encryption key with Mozy so all encryption/decryption happens on my machine. No one on Mozy’s end can ever access my data.

    That’s the way I back up my personal records. It’s very easy and I only break out the thumb drive every month or two, do a quick backup, and stick it back in the safe. Mozy is automatic so I always have that to fall back on.

  21. Fontaine says:

    Oh, BTW, I wouldn’t store personal docs on Google.

    Even if a Google employee has no reason to access your files – and they don’t – there is still the risk of ‘leakage’ onto the net. Google Docs had this problem a year or so back, where they accidentally made some private files public. They quickly corrected the problem, but your personal files are much too sensitive to chance being leaked onto the world wide web. Once out there, always out there.

  22. Phil says:

    Great posting, Jim.

    I’d also add that since my wife and I are iPhone fanatics, we’ve downloaded “JotNot” for a buck from the App Store. Excellent app that scans, processes, and then emails or uploads documents to things like an email account, DropBox, Google Docs, etc.

    Now, every important document gets “scanned” and wireless uploaded to wherever!

  23. Chris says:

    I just ran across your site and found it quite interesting. For the past 3 years I have been using a software package called “OrganizeMy Electronic Flling Cabinet for Dummies” from http://www.org-matters.com. I was fortunate that it came free from my bank. It has 2 versions, one for personal and the second for personal AND business. You can use the file structure they have set up, modify it for your needs and remove items you don’t need. It allows you to scan items directly into the pertinent file, print items to your file, track items, setup reminders, save emails, save your key contacts, websites and encrypt and save you passwords – for everything. All of this can be done on a file by file basis. One folder I really like is aptly called “Documents to file later”.

    It’s worth a look. I have saved countless hours of organizing and searching and I can do a content search if I just can’t remember where I put the file.


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