The words “Financial Organizational System” can be really intimidating, can’t they? But here’s the thing: they don’t have to be! When you break it down, this big, intimidating phrase just refers to one spot where you keep your financial papers (aka bills) divided up so you know where to find what you’re looking for when you need it.
It’s when this concept gets built up in your head and it starts to become big and scary and intimidating that it paralyzes you before you even get started.
You begin to doubt yourself. You begin to think that you could never put together an entire system! You begin to get overwhelmed just trying to think about a place to start.
Don’t doubt yourself – you can do this!
Don’t make it complicated – it doesn’t have to be!
Don’t allow yourself to get overwhelmed – that’s when you give up before you even start.
So how do you do it? How do you put your paperwork together in such a way that you actually know where to find things when you go to look for them?
You’re heard me say this before and you’ll hear me say it again and again: You start at the very beginning. You start where you are at and work through some simple steps. If you follow the steps below, by the time you are done, you will have a clear, simple, organized place to hold your financial papers.
And you know something? The beginning of the year is a perfect time to set up a new system to keep your papers organized. Now, I’m not talking about sitting down and sorting through those boxes upon boxes of financial papers from years past here. I’m talking about creating a new system to hold all the paperwork that just started coming to you in this calendar year – the bills, the donation receipts, the papers that you need to file last year’s taxes.
Let’s start here and now and create a system that you can use moving forward…and we’ll go back and tackle that box of previous financial papers another time.
Are you ready? Let’s get started:
Step 1 :: Identify a spot for your paperwork to live
This first step seems a little too simple, doesn’t it? Yet, it is very important! You need to have a spot where you want your financial papers to live. Ideally, this should be a place where papers and file folders (either hanging folders or manilla folders) can fit.
The exact spot is going to look a little different for everyone. It could be a drawer in your desk that was built for file folders or hanging file folders. It could be a crate, a plastic file box (large or smaller and more portable), a penda-flex file, or even a cardboard box to get started.
The spot that you choose will be unique to you. It will be unique to your home, your space, and it will be unique to the amount of papers you need to keep track of. If you are helping a high school student get their papers organized for the first time you will need a lot less space and a lot fewer folders than if you are organizing your papers for an entire household and you will need still more space if you are organizing household and business papers.
Do you have your spot? Is it cleared out and ready for you? Is it big enough to hold the papers you need it to hold? Great! On to Step 2…
Step 2 :: Find Your folders
Regular file folders or hanging file folders? Plain manilla colored? Or bright fun colors? Third-cut tabs or fifth-cut tabs? Letter size or legal size? Quite frankly, the choices are endless and are completely up to you!
Before you decide on anything, though, first double check the size you need by looking at the space you chose to hold your papers. There is no sense is going out to buy legal-size manilla folders if the space you have to work with will only hold letter-size hanging folders!
Once you make sure that your sizing will be correct, have some fun with this! Personally, I like using different colored folders. This allows me to color-code my categories and quickly see what I’m looking for, not only by the label but by the color. (Don’t worry, we start figuring out your categories in Step 3.)
I don’t know if you know this about me yet, but I am a big fan of office supplies – post-it notes, pens, sharpies, folders, binders. I love these tools for organizing and it’s always fun to go out and buy new ones. But before you run out and purchase all new supplies for your financial papers, check around your house to see what you might already have on hand. Folders can be reused by putting a new sticker label on them, hanging folders can be relabeled and repurposed. Use what you have on hand first before heading out to buy more right away.
Step 3 :: Decide on your big categories
Now it’s time to decide on your big categories to sort your papers. Keep in mind, these are big categories, not individual files yet. For example, you pay your electricity bill and your water bill and your internet bill each month. But these would be individual folders that all fall under the bigger category of Utilities.
Here are some ideas for categories that you might use:
- Tax information :: This is a folder to hold papers that you will need to file your taxes, but that you don’t need any other time of the year. For example, 1099 statements, W-2 forms, donation receipts, and more. This category is typically just one folder that acts more as a holding zone: A place to put those papers when they arrive so that when it comes time to do your taxes, you can easily find the information without having to hunt for it.
- Debts :: This would include any current debts that you have and records of the monthly payments that you make. For example: your mortgage, car payments, student loans, or any others.
- Bills :: These include your monthly bills such as you water, electricity, internet, pest control, and more.
- Ministries/Non-Profit Organizations :: These would include any ministry or non-profit organization that you donate to whether it be physical donations (like taking clothes to GoodWill or the Salvation Army) or a monetary gift. You may choose to have multiple folders in this category or simply keep all the information in one folder.
- Bank Statements :: This category very simply holds your bank statements.
- Insurance :: This is an easy place to hold both your insurance bills as well as a copy of the insurance policies that you have.
Keep in mind that these categories are suggestions. You may use all of these categories and no more, you may use only some of these categories, or you may use all of these categories and add a few more of your own. Remember, these are your papers. You know best what categories to choose for the papers that you have to keep track of.
Take a quick moment and write down the categories that you want to use, then number them in order how you want to see them appear in your files.
Step 4 :: Set up Your Spot and Label Your Folders
This is where you see it all come together: Labeling your folders and setting up your files. Now, I know, this sounds like a very intimidating step, but it doesn’t have to be! Just take it one small step at a time.
Personally, I like to give each category a different color so that the categories are easy to spot in the drawer or crate of files. If you don’t have enough colors to give each category its own color, try rotating the colors. That way you still have the visual break of color in between but you aren’t needing to find folders in 8 different colors. (Most packs of colored folders include 5 colors.)
Grab your list of categories that you made in step 3, your folders, and a pen or sharpie to label your folders. This is your map for setting up your files. Now all you have to do is follow these simple steps:
- Look at your first category.
- Choose a folder color (hanging or regular) for that category.
- Pick up a folder in the color of your choice and label the folder with the correct name. Keep in mind that these names are going to be specific. The folder will not say ‘Debts,’ but ‘Toyota Car Payment.’ It won’t say ‘Utilities,’ but ‘Water Bill’ or even the name of your water company.
- Place the folder in the correct spot in your drawer or crate or box.
- Repeat steps 3 and 4 until you are done with that category. If the category is complete, go back to step 1 and repeat all 4 steps.
As you are creating your folders, make sure that you are staggering the tabs so that you can easily find the folder that you are looking for.
Congratulations! You now have a spot all set up and ready to use for your financial papers!
Step 5: Consistency is Key
But, let’s face it, this beautiful system that you just spent your time creating won’t help you at all if you don’t use it. This is where consistency comes in. And, yes, this is building and maintaining a habit.
Whenever a bill or a statement or another piece of financial information comes in, take care of it. Now, that could mean reconciling a bank statement, paying your water bill, reconciling a credit card statement and then paying it, or simply filing the paper in the correct folder if there is no action that needs to be taken on it.
Now, this does open the question of where to put the newest paperwork. Some people take the tactic of putting the newest information in the front of the folder. That way, if you were to pull the folder out and open it, the newest information would be on top. Some people prefer to put the newest information in the back of the folder. That way, if you were to pull out the folder and open it up, it would read like a book, starting at the oldest information and moving to the newest.
Which way is best? Whichever way you prefer! This one is completely up to you. Choose the method that works for you, the one that makes the most sense to you and stick with it. The biggest key is to choose one method and keep it consistent!
Quick Tip: You may choose to have a folder or a basket or some holding spot where you place your bills and important papers when they arrive in the mail. Then, on a few designated days a month (every week or every 10 days), you could go through and process all of those papers at one time instead of trying to take care of each piece of paper as it arrives.
Don’t Overcomplicate This!
While some people try to make organizing your financial papers a very scary concept, don’t be scared! The key is not to overcomplicate it! Keep it super simple. If you want to get more complicated in the future, go for it! But when you first start out, keep things really simple so that you can figure out exactly what you’re doing.
Remember that organizing is not a one-and-done deal. While it is possible to set up a system like this is a matter of a few hours, it takes time and consistency to keep that system going. It’s not just a one-time deal.
You have to commit to taking those small, consistent steps in the right direction over time that gives you the progress, takes you through the process, and creates the organizational system that you are wanting.
It’s not about perfection! It’s all about the progress in the process.
Additional Resources:
- What To Do with Your Financial Papers of Years Past
- How To Deal with Piles of Paper in Your Space
- How To Organize Your Desk and Why It Matters
- What Is Being Organized and Why Is It Important?
Elizabeth Tatham, founder of Inspiration in the Everyday, is a homeschooling momma of 5 who loves helping other homeschooling mommas create a unique homeschooling adventure your kids will love…without the overwhelm! Join in on the journey with 7 simple steps to make your homeschooling day go faster, easier, and with less tears here.