The whole point of saving paperwork (as actual paper or digitally) is to be able to refer to it later!. You need to be able to find it, or it’s just clutter! Here are some ways to make retrieving paperwork easy, navigable, and actually useful.
Labels
Having nomenclature or “naming rules” for your paperwork helps you find things again when you need them. Use categories to simplify your files–but not too much! A file folder labeled “Home Expenses” packed with dozens and dozens of pieces of paperwork in it isn’t very useful.
For paper systems: Create a hierarchy of categories and subcategories using hanging folders and interior folders. You could still use a “Home Expenses” folder! It just needs to be divided into subfolders like “Repairs,” “Mortgage Documents,” and “Yard Maintenance.”
A good rule of thumb for folders is limiting the amount of paperwork to 5-20 individual documents in each folder. Any folder with fewer than 5 documents doesn’t need to be its own category. Any folder with more than 20 documents should be divided into subcategories. The 5-20 rule makes for easy retrieval, since you don’t have to sift through piles of paperwork to find what you need.
For digital systems: The folder/subfolder system works just like paperwork, but you can use fewer levels of folders with digital filing because they are searchable through keywords. With that in mind, naming your files in a consistent, searchable way becomes very important!
One of the most common problems I come across when helping clients go through their paperwork is keeping items because they’re unsure of when it’s time to let documents go. You don’t need all paperwork forever! For any specific questions it’s best to consult your CPA or attorney, but I have general rules you can follow to organize financial paperwork.
Forever
“Forever” documents should be kept your entire lifetime, and in some cases passed on to any beneficiaries you have. These are things like your social security card and your birth certificate. Keep these documents in a safe place so they can’t be lost or tampered with. Create backups online or in a separate location in case of a natural disaster or fire.
Permanent
“Permanent” documents are kept for the life of the item they’re for. These are things like documentation related to stocks and shares. Once you let go of an item, there’s no reason to keep its paperwork! Make paperwork a part of your overall decluttering process–if your vacuum is ready to donate, look around for any paperwork associated with it and let that go too.
Many people feel overwhelmed when they think about letting go of items to declutter their home, but I’m here to tell you that you have more power than you think! Actually, you have all of the power! After all, this is YOUR home you’re decluttering. That means you make the rules. You get to decide:
what goes in it,
how much goes in it, AND
what to let go of!
Imagine your ideal home. What’s it like? Is it cozy, filled with objects you love and display proudly? Is it functional, with everything you need and nothing you don’t? Is it sleek and minimalist, a place where you can think clearly and feel freedom?
How does your ideal home differ from your home now?
I’m asking all these questions to clarify what your goal is when it comes to decluttering. As famed inventor Charles Kettering said, “A problem well-stated is half-solved.” When you know what you’re working toward, it’s easier to see the path to it. Find useful questions to ask about your space, like:
What do I mean when I say “time management?” Time is impossible to manage! It just keeps on ticking no matter what we do. When I talk about organizing your time, I’m really talking about priorities. You can’t manage time, but you can certainly manage what you DO with your time.
YOU get to choose what you do each day (within reason), and that means you have some decisions to make! But what do you spend your time on?
Finding your Priorities
If you don’t take a moment and take stock of how you spend your time, it’s easy to fall into a routine that includes lots of wasted time. Keep a quick diary of what you do for a normal week (what you REALLY do, not what you think you should do), and at the end of the week look at how you’ve spent your time. Was there anything you wanted to do but couldn’t get to? What could you cut out of next week to give you the space for important activities?
This is a scary question. Is your financial disorganization costing you? Or worse, how much is your financial disorganization costing you? Because if your finances are not in order, I can virtually guarantee it’s costing you something.
Do you struggle to keep your financial paperwork under control? Do you have little piles of receipts all over your office? Or are they shoved in a box to hand over to your accountant at tax time?
There are two secrets to keeping on top of it all so you don’t miss important deductions–and your poor accountant is not pulling their hair out at the end of the year!
Set up a filing system that is easy to use and accessible.
Do a little bit often.
Paper systems
The simplest filing system mirrors your accounting system. The categories you use when entering expenses into your accounting system will be the same you use for your filing. Make a folder for each category of spending you get receipts for. Each week, after you enter your receipts and invoices into your financial tracking system (ledger, spreadsheet, Quickbooks, etc.), simply drop the receipts into the appropriate folder. You will keep track of your spending and your income and know where you stand each month.
Have you ever had a pile of papers that defied being labeled? Or perhaps you’re worried that if you do file that important piece of paper, you’ll never find it again in your cavernous filing system. Yet some people seem to be able to put their hands on any piece of paper they are looking for within seconds. What are their secrets for labeling files?
Create one overall system and stick to it. If you forget what categories you have in your filing system, create an index so you can scan the index to file and find items.
