How to Organize Your Bills and Financial Documents
How to Organize Your Bills and Financial Documents
Have you been meaning to organize your bills, but aren’t sure exactly where to start? It can be confusing and overwhelming to create a system if your current way of organizing is pretty much non-existent.
The beauty though, in organizing your bills and your financial documents, is that once you create a system and have a plan in place for maintaining it, you’ll enjoy the feeling of having everything in order.
And there is something to be said about having your financial house in order. When your finances are a mess, figurately, a great first step to addressing your situation is to clean things up, literally. In fact, I like to say the first step towards paying off debt is to get organized.
A system to organize your bills
There are multiple ways to approach organizing your bills. The method I’ll share with you is the one I used when I first started getting my finances together. I learned it from David Bach’s book, Smart Couples Finish Rich and have tweaked it a bit.
With so much of our banking and day-to-day transactions happening online, many of us can get away with having very few papers to file. This system was created as a paper filing system, but the same approach can be used to organize your documents electronically.
Depending on how “paperless” you are, you most likely will end up with a hybrid system — folders for those items that need to be physically maintained and files on your computer for everything else.
I recommend setting aside an hour or two, or even a half-day to set this up, depending on how (un)organized you are now. 😉
Here’s what you need
- 13 hanging file folders and 40-50 file folders if you’re a “paper person.” (Much less if you’ll be doing an electronic or hybrid system.)
- An existing filing cabinet or portable filing box.
Steps to take to organize your bills
- Gather up all your current bills and financial paperwork.
- Label one hanging file folder for each of the 13 categories below.
- Within each hanging folder, use one file folder to represent each account you have in that category.
- If you’re doing this on your computer, create a folder for each category, and then nest subfolders accordingly.
1. Tax Returns
Decide how far back you want to keep your tax returns (anywhere from 3 years to “forever,” depending on your situation) and use the corresponding number of file folders plus one for the current year.
Label each folder with the year, and place your filed returns in them.
The folder for the current year should be used to store receipts throughout the year that you will need at tax time as well as to collect your tax documents as you receive them. When it’s time to do your taxes, everything will be in one place!
2. Retirement Accounts
Keep all of your retirement account statements here. Designate one file for each account you have, and label it accordingly. This is where you will file your quarterly statements as well as any initial sign-up documents you have.
3. Social Security
4. Investment Accounts
This folder will hold the statements for any non-retirement investment accounts you have. Designate one file folder per account and label accordingly.
5. Bank Accounts
Store your monthly bank statements here. Label and use a file folder for each savings and checking account you hold.
6. Household Accounts
This folder contains any documents related to your home as well as recurring household bills. Use and label one file for each of the following:
- House Title
- Home Improvements
File your receipts and records of any home improvements.
- Mortgage or Lease
File your mortgage documents and monthly statements or lease and payment receipts.
- Utility Accounts / Household Bills
Use and label one folder for each utility or service account you have (electricity, gas, internet, cable, phone, cell phone, etc.), and file your monthly statements here.
This folder should hold the records for any debt you have outside of your mortgage (credit cards, car loans, student loans, tax debt, personal loans, etc.) Include any accounts you may have in collections. Label one folder for each loan/account, and in it place the original terms of the loan/agreement as well as the monthly statements.
8. Other Bills
This folder holds any other bills you have outside of your debts and household accounts like gym memberships, subscriptions, etc. Anything that you pay on a recurring basis. Label one folder for each account. If you have a lot of medical and dental bills, you may want to create a folder for them as well.
Use this folder to file your car title and maintenance and repair records. If you have more than one car, use one file folder for each.
All your insurance documents go here. Create a separate folder for each policy (life, auto, homeowners, renters, etc.). Include the original policy documents as well as any monthly statements you receive.
11. Family Will or Trust
A copy of your will or living trust goes in here.
12. Vital Documents
This folder holds your passports, Social Security Cards, birth certificates, marriage license, and any other vital documents. (Note: It is often recommended that such documents be filed in a fireproof box, so be aware of the risks involved with filing them.)
13. Children’s Accounts
If you have kids, use this folder for any bank accounts and investments you have for them. Label one folder for each account.
Okay, that’s it! You’ll end up with 13 folders if you have kids (12 if you don’t). Feel free to add any folders as your situation warrants.
Create a plan to maintain your organizational system
The key to keeping your bills organized is to have a plan for managing your system. So, decide how often you will file your bills and other documents. Weekly? Bi-weekly? Monthly?
Think about what makes sense in your world and what you will stick to — realistically. A system will only work if you follow it.
Once you follow these steps, you’ll have a neatly organized system to store and keep track of all your bills and financial documents and a plan for maintaining it. You’ll love the feeling of knowing exactly where everything is without having to go search in random drawers and shoeboxes to find what you’re looking for!
Have you tried to organize your bills before but it didn’t work? What can you do differently to make sure it sticks?