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Organize Your Financial Records

Organize Your Financial Records

Ugh, I just barely made it through tax time sane and sober and now I’m writing about it. Most people make New Year’s Resolutions; this year I made tax time resolutions. You know the kind, I’m going to keep my receipts organized, I’ll enter everything into Quicken or Mint and maybe, just maybe I’ll stick to my clothing budget.

I’m supposed to be an expert organizer so you may be wondering why the subject of financial organization has me stressed out. Well, I have a good reason (at least it seems like a good excuse, um reason to me). I moved twice in two years and one of those moves was cross-country. Prior to this, I had lived in the same house for 12 years. When you move, your organizing systems inevitably change. That once convenient spot for keeping bills to pay is suddenly not convenient in the new house. In my newest house, my home office is the furthest room from the mailbox. Bills and receipts began to accumulate on the stairs, just hoping for a kind soul to drop them in their spot on the desk upstairs. It didn’t happen. I have teenagers and although I love them at this stage in their lives they’re souls are not very kind. So my bills and receipts didn’t make it upstairs and as I sat down to prepare for taxes I was completely and utterly overwhelmed. What should have taken an hour took an entire Saturday. 

I resolved to get organized so this wouldn't happen again next year. Here is what I did:

  • Created a designated incoming paper zone by hanging wall pockets inside the hall closet. This was as close to the front door and incoming mail as I could possibly get. Having your paperwork sorting center as close to the source of paperwork eliminates any detours on the kitchen counter or other available surface. I don’t like to see bills and paperwork so I hung the wall pockets inside the closet.

  • I labeled the wall pockets. Bills, Medical, To Do, To File and School.It’s tempting to just get the bins in place, but if you don’t follow through with labeling you will very quickly have a disaster on your hands. Plus if you want your family to help, you will need labels. Keep your system as simple as possible. For some people to pay, to do and to file is enough.

Here is how I organized my financial records specifically:

  • In the bills wall pocket I keep my Financial Organizer. As bills come in I slip them into the pocket for the month they are due. I also collect receipts in here. When I sit down to pay bills each month I keep the paid bills in the pocket and place tax related receipts into the tax records pocket.
  • Anything tax related should stay in the Financial Organizer. At year-end I’ll toss paid bills, like the water bill for example. If you take a home office deduction you may need to save copies of all your utility bills, you should check with your CPA first. You should also keep bank and credit card statements. Keep them sorted by month in the Organizer.

  • Once my tax return is done I’ll slip it into the Financial Organizer as well.There is a pocket specially made for it. In case of an audit I’ll have everything I need in one handy location. With all the extra time I have because I’m so organized I think I’ll go shopping, I can’t be expected to keep all my tax time resolutions.