Financial Record-Keeping: What to Do When You Can’t Open Your File Drawers Any Longer

This post was inspired by my inability to squeeze even one more sheet of paper into our main file drawer. Yeah, it was that full:

It also made this disturbing THUNK whenever I tried to open it, as if it were thinking of jumping out in protest and landing on my foot.

So I decided it was time to do a little financial record-keeping and organization. Obviously, my files started out as a hugely disorganized mess.

I did have a filing system — it’s just wasn’t a very good one. My “system” was this:

I stuck everything that could possibly be considered tax related into a file. (My “Taxes” file for 2009 is like an inch and a half thick.)

I did the same thing for bank statements, except that file folder isn’t even broken down by year. I just have years and years of bank statements crammed willy-nilly into a single folder.

Then there is everything the insurance company has ever sent me in the 13 years we’ve lived here, etc. It just gets worse from there.

So step one was purging. I decided to leave the tax folder for another day (probably April 15th), but aside from that I started by pulling out every single folder and going through each sheet of paper in it. Then I asked myself these questions:

1. Is it tax related? If yes, put in appropriate tax folder. If no…

2. Is it more than 3 years old? If yes, either recycle it or shred it (depending on whether or not it contains identifying information).

Those two questions got rid of literally a good 8 inches of paperwork from the drawer.

Next up was organizing the remaining paperwork. I sorted the contents of each file by year, rubber-banded the papers for each year together, and put the files back.

I prefer to keep the most current information at the front of the files, so in theory at the end of this year all I will have to do is throw out the oldest set of papers in each file. Most people probably prefer to make a file folder for each year, but since I tend to put things in the wrong year I’m better off not doing that.

After this it should just be a matter of making sure I do not keep things that I’ll never need again. (Or get them in the first place.)

Do you have a financial record-keeping system in place? Hopefully it’s a better one than mine.

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2 comments

  • I had some drama with this recently as my husband and I were mucking through the immigration process (we were approved! His green card is on the way! yay!). The INS wanted all kinds of documentation, and naturally I couldn’t find half of it. I had most of my tax returns on a computer that is near death, blah blah blah. So, my game plan now is to have a hard file copy, a digital copy and a back up digital copy–all in an easily accessible place. I don’t want to go through this drama again. As I was looking through my files, I realized I had bank statements that were 8 freaking years old. Nuts! Oh, the job that’s ahead…

    Feel free to swing by and straighten out my mess as you did yours, if you feel so inclined. ;)

  • Hopefully you’ll keep your backup digital copy someplace off site. I like mozy for that.