Ya’ll, it’s that time of year again- tax season! Sifting through receipts may have you wanting to pull your hair out over your current filing system. You may also be looking at old receipts going “do I still need to keep this?”
With most people going to electronic receipts, you may not even have a filing cabinet- like me. However, you may still have a few bills that trickle through the mail system that you want to keep record of. I’ve got you covered with my super easy filing system.
A few years ago, I interned at a nonprofit that assisted people with paying their bills on a fixed income. I fell in love with their filing system and have followed it ever since.
Easy Filing System
Step 1: Locate a binder and a three hole punch.
These two items are all you need for my filing system…very cheap items.
Step 2: Sort bills by date…not utility
Many people have a file folder for anything: electric, phone, water, gas, insurance, etc. Anything you want filed, should be sorted by the date it was issued, not by the provider of the bill. If you’re looking for a certain bill, most likely you’re looking for a particular month, not just the name of the utility. This system makes it easy to find all your bills from September 2015.
Once you have this system in place, it makes it much easier to file as mail comes in, because you can sort everything by date and divide it by years or even months. I keep my binder on the counter. When mail comes in, I open it, three hole punch it, and stick it in the binder.
Note: At the back of my book, I keep all of my retirement information. At the end of the year, I just keep the end-of-year summary with my permanent records.
Step 3: Keep small receipts in envelope in binder
Items, like receipts, that are too small to be hole punched can be store in an envelope and put in a folder pocket in the front or back of the binder.
Step 4: Store the book for 3 years
For tax purposes, you should keep your records for the last three years just in case you get audited. When I have filled my third binder, I can shred everything in my binder from 2016 and reuse the binder. I keep my binder and planner from that year on my bookshelf.
Step 5: Save important documents in another location.
My mom is an accountant and has always kept great records of everything, which can be difficult with 6 kids. As we got older, she created a file folder box for each of us with any documentation she felt we would need. When I moved out, I had my health insurance information, title to my car, passport, birth certificate, immunization record, etc. all conveniently in the box. Over the years, I’ve added other important documents that I know should never accidentally get shredded.
What if I already have a file cabinet?
When I convinced my mom to change to this system, she didn’t want to use binders because she already had two filing cabinets. Instead, she created file folders for each month for the next three years. As bills come in, she puts them in the correct month. Instead of once a year, my mom empties and shreds a 3-year-old file of old bills every month, whites out the year on the folder, and reuses the file folder for the current month. She keeps a year’s worth of records in a separate drawer in her filing cabinet and her permanent files go in the fourth drawer.
Have any other suggestions for an easy filing system? Let me know in the comments!
That is something I need to do in the new year. Great post and suggestions!
It’s easy for paperwork to get away from us. Hope this a helpful system for you!
This is wonderful information. Paper just seems to pile up until it seems unmanageable. I know know how long to keep everything.
Thanks! I’m glad you found this useful. Because I didn’t have a filing cabinet, I had this big box with all this paper. Now, it’s so easy to find everything I need.
We are in need of an office renovation, and this is perfect to show my husband for options… This would save SO MUCH room. Thanks for sharing!
Yes, it does! I love this system because it takes so little space, and it’s easy to identify what can be shredded, instead of rooting through a huge file cabinet.
I love organization ideas! I’m all about minimizing, and keeping my life simple. Thanks for these tips!
Me too! I’m really trying to get rid of excess and live as frugally as possible. I love this system with my minimalistic mindset!
Love this! So easy, and those binders would take up minimal space. Excellent idea.
The binders take up very little space, and it’s easy to shred the contents after three year!
Regarding the three years statement, I have a blog post with a breakdown on how long to keep documents for business. I just updated it this year and its been checked by several CPA’s. Keeping stuff for business is a whole ‘nother can of worms compared to personal documents.
https://www.mklibrary.com/finance/how-long-to-keep-paperwork-and-records-for-taxes-for-business/
A business is a totally different set of circumstances as far as record keeping, and I wouldn’t recommend this system for any business. As for a personal household, my mom has kept financial records as an accountant for multi-million dollar businesses and individuals, and I follow her 3-year recommendation.
Great idea! There can be SO many papers to keep track of!
Totally agree! It’s so easy for papers to pile up.
This post came in handy, as I’m in the process of trying to get a ton of papers under control. Thanks for sharing!
No problem! Glad you found some useful informations. Thanks for stopping by!
Being organized is so important. Love your ideas and tips! This is a great post. Makes me want to go organize my office. 🙂
These are great ideas! I like the binder system the most! Definitely going to use that!
You are my organizational guru. Thanks!