Let’s face it: No one likes to deal with paperwork and clutter, especially the finance-related stuff.
When you spend hours combing through sheets of easily torn, ink-smelling material, it can be mind-numbing. For the sake of being a responsible, tax-paying citizen, though, you have to do it.
Fortunately, you don’t have to do it the hard way.
If you want to find the files you want, when you want them, you need to organize your finances. For that, you can follow these four steps to declutter and organize your finances.
1. Invest in a Filing Cabinet
In general, the bigger a filing cabinet is, the better.
Even if you don’t have much paperwork at the moment, you can expect the pile to grow larger and larger over time. And I’m not saying you necessarily need to purchase those big metal file cabinets either. The one I use at home blends right in with the couch and works as a side table so it won’t be an eyesore.
Also, the more drawers a filing cabinet has, the better. This will make it easier to separate your files into specific categories.
For example, you can designate one drawer for “credit cards”. Another can be for “auto,” still another for “insurance,” and so on and so forth. Within the drawers, you can separate files according to folders (e.g. “annuals,” “quarterlies” and “monthlies”).
There’s no one-size-fits-all rule to using a filing cabinet. As long as the organization makes sense for you, and as long as it cuts down your search time significantly, any rule goes.
2. Make Electronic Copies of Your Files
But, what if a filing cabinet isn’t a practical option? What if there isn’t enough room in your place for one? What if, despite your filing cabinet, it’s still a hassle to search for files? That’s where the electronic option comes in.
The nice thing about electronic files is they are much, much easier to find when you need them.
All you have to do is type the file name in the “Search” bar on your computer, and presto! The document you want shows up in no time. Also, you can easily drag-and-drop digital files between folders when the situation calls for it.
If you can easily access a document online, e.g. bank statements and tax returns, you don’t need a hard copy of it. You can just download those digital copies, save them on a malware-free hard drive, and shred the physical copies sent to you on a regular basis.
If, however, you need the physical, original copy of a document for any reason, e.g. birth certificate or marriage certificate, you can scan the document, file the original one in a folder, and keep that folder in a secure, damage-proof place.
It’s super easy to scan your documents with a small scanner like this:
It’s very similar to the one I use for scanning all of my personal and business financial documents and receipts, and it works great!
3. Use Apps to Track and Organize Your Finances
At some point, you’re going to need extra space or a backup for your electronic files. For that, use Dropbox, Google Drive, and other cloud storage services. These will allow you to access documents no matter where you go or what device you use.
In case you need help organizing the files per se, there are apps for that, too. If you’re comfortable with Microsoft Excel, you can link your finance-related worksheet to supporting documents.
Otherwise, download the best tracking apps for your smartphone. There are ton to choose from!
For my business receipts, I use the FreshBooks app. For personal accounts, I like Personal Capital because it lets me see all of my financial accounts in one place.
4. Schedule Time for Getting Organized
You don’t have to clean up your paperwork every day. It’s fine to do it once a week, once every two weeks, or once a month, whichever is most convenient for you. The important thing is to make a habit of it.
Habits take time to develop, though, so you’ll want to block off “Paperwork Clean-Up” on your calendar, until it becomes second nature for you to declutter and organize your paperwork regularly.
Now that you’re finished, don’t forget to reward yourself for a job well done!
That way, you’ll learn to associate “organizing finances” with “a cup of fresh, steaming Starbucks coffee” instead of “soul-sucking drudgery.”
By spending time now to save time in the future, you’ve definitely earned that reward.
How do you organize your finances?