It's Spring -- Do You Know Where All of Your Documents Are?

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It's time to weed out your financial papers.

As the weather warms and you gear up for a big spring cleaning, it's also an excellent time to organize your financial papers. This is an important step toward getting your finances in shape.

Creating a filing system that works best for you is essential, but many people proceed directly to creating a paper-shuffling systems of loose papers and folders and forget other details that doom their organizing system.

So while you are cleaning and organizing the rest of the house, here's how to rethink how you store your financial papers and create a better system:

Determine a Central Location

Most people keep their important papers in the wrong place. They choose an out-of-the-way spot such as the basement, the back of a closet or a spare storage room instead of an area that is centrally located and easy to access.

If you fail to pick a place that makes it easy to immediately file away the papers, the papers will end up on desks, in drawers and spread among various boxes all over the house.

There is an easy way to determine if your current filing system is adequate. If you know exactly where all your tax information, credit-card statements, household bills, banking statements, appliance warranties and manuals, passports, investment papers, wills and insurance papers are without searching and they are easily accessible, then you have a good system.

If you are like most people and don't know instantly where all these documents are, then it's time to determine an easily accessible place for all of them.

Disorganization will not only cost you valuable time when you need to locate your important papers, it can also cost you money.

While individuals who are young and single can probably get away with a large folder to keep track of their financial papers, if you are married or have any type of investments, you really need to purchase or create a filing cabinet dedicated to them.

Where you place it depends on where you open your mail and take care of the bills. Placing it in a home office or next to a family room desk where you open mail makes it easy to access and file everything immediately so it doesn't get lost or misplaced. Some people even use a kitchen cabinet. The most important thing is that it's where you have easy access and a place that you use regularly.

Create a Master Document

Once you have established a place to store all these financial documents, then create a master document.

While you won't be able to create this master document until you have gathered all your other financial information and determined a filing system, it's important to mention it here because most people never create one.

Once all their financial papers are gathered together, they feel that is enough and they are finished -- which can be a huge mistake.
You may know what all the papers mean, where they are located and how they are filed, but nobody else does. The importance of a master document is to explain what all of your financial papers are as a guide to an executor of your estate or anyone else that may need access to them someday.

In addition to explaining the filing system you have created, it should also contain all the important financial information not filed away such as online account information, where your safety deposit box key is located and important contact numbers.

Develop a Financial Routine

Much more important than your filing system is getting into a routine of regularly filing your financial papers. Whether that is opening mail a few minutes on a daily basis or placing all financial mail on your desk to open and file once a week, creating a set routine makes it much easier to keep all your financial papers in order and properly filed.

When creating the routine, take the time to coordinate your filing system with other ways you track your finances. If you track your budget using computer software, make sure to input the needed information at the same time that you file the papers.

At the same time, make sure to note due dates for bills and other events on your calendar, personal organizer or electronic assistant. By creating a routine to do all these things at a specific time each day or week, you can organize most of your finances in one step instead of several.

Make the Filing System Flexible and Simple

How you organize your financial papers once you have determined a central location really isn't of importance as long as it makes sense to you. Each person is different, and what works best for one won't necessarily be the best for another. The main point is that it's a system that you understand and will want to use.

You need to be consistent and choose a filing system that you are most comfortable with. There are a number of ways that you can create the system depending on what most appeals to your sense of organization.

While the most common method of filing is by subject or category (dividing financial papers by topic), you can also file papers month by month (placing all the financial papers that you receive each month into separate folders), color-coded (each color represents a category or subject) or by priority (placing papers in the order that they need to be taken care of first). Any of these systems will work.

When you actually make your filing system, make it flexible and simple. If you aren't sure how specific to be when beginning, opt for broad categories. Many people try to make a huge number of specific categories at the beginning and there are so many that it makes it difficult to keep track and the entire filing process becomes overwhelming.

If you find over time that a certain category is too broad, you can easily create sub-categories or an entirely new one as you see which papers you deal with most each month.

Take part of a day during your spring cleaning routine to focus exclusively on your financial papers and you'll be surprised at the rewards you reap.

 

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