Paper is the number one problem for my clients and customers. Tax season tends to highlight the flaws in our paper filing systems each year as we scramble to figure out where to find everything we need. Having the right system from the start can make it a lot easier. Knowing what was challenging this year, can make it a lot easier to decide what will work best for storing 2016 papers.
Studies have shown that 80% of the paper that is filed each day is never looked at again. That’s a lot of storage for useless documents! This statistic highlights why it is even more important to establish what you actually need for taxes and household reference.
Let’s start with the basics for a filing system. The first step is figuring out where the paper is going to go. Do you already have multiple file cabinets throughout the house? If you do, then you are going to want to be sure to clear some of them out before you rush to buy another one. Keep a filing cabinet near where you process your paperwork. If it is in the kitchen or dining room, then it might be good to keep either a portable or permanent filing system within quick reach. You are much more likely to deal with filing your papers immediately if the filing system is nearby. If that is not possible, then make it a habit to walk any papers to be filed to the file cabinet the day you work on them. “To File” piles end up being endless abysses of paper that you will end up sorting through for taxes next year. And you will be kicking yourself for not dealing with it sooner!
Once you have established where the files will go there are many ways you can set-up an easy and effective system. First, there are products out there that label your files for you. So all you have to do is drop in the categories. For instance, my Instant Filing system, which sells for $14.95 at our Etsy shop Life’s Lists (Life’s Lists Instant File System), gives you every major category for household and small business paperwork, including Banking, Insurance, Investments, Medical etc. If you are more into personalizing your files into categories you choose, you should check out Smead Viewable hanging file tabs. These three dimensional file tabs allow you to use a simple color-coding program on the computer to label and print custom tabs that can be viewed from the top as well as the sides. Placing them in a straight line when you attach them to hanging file folders will make finding your files extremely easy.
Remember, as you are creating your files, keep the categories simple. Getting too detailed will make it hard to remember what category you filed something and too broad will make it difficult to track down a paper quickly. If you keep most of your categories focused on what you need to refer back to for everyday financial records, taxes, home and medical, you will find that you really don’t need to keep that much paper.
If you have a lot of hobbies and are finding that you clip every magazine article with a new recipe or every tip you see on gardening, ask yourself how many times you have actually referred back to them once you have filed them. There is a good chance every time you revisit your files you are going down memory lane and seeing paper you didn’t even remember keeping.
Lastly, make sure that you purge your files constantly. If you get a new insurance policy, throw out the old one. Continuing to pile papers into a category that are not current will only make finding the current ones harder. Each year, archive the old paperwork together and remove it from your everyday files. It is a constant shuffle, but worth the time throughout the year. You will thank yourself when you prepare your 2016 taxes!
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