How to Organize Your Finances at Home

There are many facets to being financially responsible, from spending within your means to managing debt to saving for your future. But there’s one area that’s crucial to set the foundation for managing your personal finances, and that’s keeping your financial records organized.

Whether you need to hunt down a receipt for a major purchase or need a utility bill to show proof of residency, there are times you’ll need to locate a financial document in a hurry. By organizing financial records ahead of time, you can find whatever documents you need exactly when you need them. 

Determine which documents you should keep

We tend to fall into two main categories when it comes to organizing financial records: those who keep everything and those who keep nothing. If you’re someone who hoards paperwork, you’re likely drowning in documents that are simply not necessary.

Start by going through all of your financial records and eliminating anything that isn’t essential. If a document can be easily accessed elsewhere, such as online banking statements, there’s no need to maintain a paper copy of the same information. However, if it’s something that’s difficult to replace or is legal in nature, it’s worth keeping. 

• Records to keep temporarily: Only keep utility bills, credit card statements and minor purchase receipts for 1-3 months. These are frequent financial records that can cause a paperwork overflow if you don’t stay on top of filtering them out. 

• Records to keep more than a year: Maintain more substantial financial records like mortgage statements, paycheck stubs, receipts for major purchases, and medical bills or claims for more than a year. The IRS generally recommends keeping annual tax returns and supporting documents for 3-7 years after the date of filing.

• Records to keep indefinitely: Keep all legal documents such as birth certificates, marriage licenses, adoption papers, citizenship and military discharge papers, and Social Security cards.

Be sure to shred any financial records that you don’t plan on keeping. This helps safeguard information you don’t want stolen by identity thieves.

Choose a document storage system

Once you’ve sorted through your financial records, it’s important to figure out how to file the remaining documents in a format that meets your organizational tendencies and needs. It doesn’t need to be an expensive or complicated storage system — just something that makes sense to you and gets the job done.

For hard copies, use a filing cabinet or hard case storage box for organizing financial records. Label hanging file folders, so they are easily identifiable and tailored to your personal finances. For example, you may find it helpful to have separate file folders labeled for bills that are due, filed tax returns, current tax records, and warranties for major purchases. File all of your documents according to each labeled category.

It’s not necessary to keep hard copies of most financial records. You can free up a lot of desk and home office space by scanning documents and saving them to a cloud server that can be accessed from any of your devices. It’s best to use a cloud server to prevent losing your financial records if your desktop or laptop crashes. Apps like Scanner Pro make it convenient and easy to quickly scan in receipts and bank statements from your smartphone or tablet. 

Put together a financial record cheat sheet

The final step is to create a quick reference guide that can be used for yourself and in case a designated person, such as a surviving spouse, ever needs to navigate your finances during an emergency. Include locations of all of your important financial records and passwords, if applicable. You should also include your financial advisor’s contact information, the location of your safe deposit box key, and any other pertinent financial information. 

Whether you go the digital or hard copy route, it’s up to you to choose how to file your records in a manner that best fits your needs. Once you get organized, you should go through your filing system periodically to trash or shred any records that are no longer needed. 

It may take some time to initially go through everything, but by organizing financial records at home, you can free up space and minimize your stress when it’s time to locate an important document.