Tips for Organizing Your Financial Documents

In an increasingly paper-free society, organizing your financial documents can still be a challenge. No matter how simple or complex your financial picture might be, it takes some thought-out organization to keep your tax documents, service records, and paid bills in a format that will allow you to easily access information when you need it. What steps can you take now to organize your financial documents for 2021 and beyond?

Clean and Evaluate

If your financial files look more like a pile of loose papers, it’s time to clean up this pile and evaluate what you have. Broad category labels like “House,” “Bills,” “Healthcare,” or “Taxes” can be enough to help you begin sorting documents into piles.

Once you have your documents organized into tidy piles (or online file folders), the next step is to determine what you need to keep. Saving documents you’ll never need again can lead to clutter and leave you unable to find information quickly. On the other hand, throwing something away too early (like W-2s or 1099s) can create a headache if you’re audited or need to go back to find something specific.

Create a Filing System

After you have a better idea of what financial documents you’re dealing with, you can create a filing system. There’s no one-size-fits-all answer here, and the best filing system for you, is the one that is easiest for you to use. This can mean creating folders by month, keeping items segregated by category, or something else—whatever makes sense for you based on what you’re trying to keep organized.

Decide on a Storage Option

If you’re not a fan of paper clutter, your financial organization strategy may be to use a desktop scanner to scan and store all important papers. If you prefer this option, you can throw (most) originals away and diminish the need for physical storage. It should go without saying that you should always back up your scanned documents!

On the other hand, many people find it helpful to be able to physically pull and look at documents when needed. A file cabinet with hanging file folders is often a good way to organize, as is a banker’s box or any other sturdy container. Depending on the traffic in your home and the types of documents you’re dealing with, it’s also worth thinking of whether you’d like a way to keep these documents locked away. Just make sure you remember where the key is or keep a spare in an easily-accessible location.

Read Documents before Filing Them

When it comes to disputing transactions, replying to the IRS, or submitting claims on an extended warranty, you often have only a limited amount of time to act. This means that organization isn’t a one-and-done project; you’ll need to make a commitment to look at papers as they come in, act on them if they need action, and only then file them away. This process will help avoid having important issues fall through the cracks.

By following these steps, you can be well on your way toward a more organized financial future.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.


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