5 Tips for Organizing Your Financial Records

How many hours do you waste each month trying to locate bills and receipts because you have them heaped in various piles around the house? Have you ever missed paying a bill because you just couldn't find it? You need to organize your financial records. Having all of your bills, receipts, family and personal records and legal documents organized will save you hours of time and many headaches. Organizing your financial records is a simple process that once set up only requires monthly maintenance and a little discipline. These 5 tips will help in organizing your financial records which will relieve some of the stress in your life.

Keep all of your records in one place. If you can afford it, the best solution for organizing your financial records is to have a file cabinet dedicated just to financial and legal records. For the average family, a three drawer, 36 inch high cabinet should be big enough. If you can't get a file cabinet, there are cardboard storage units called "banker's boxes" available at office supply stores which are made for organizing financial records. There are also accordion files and plastic cases which are smaller but could work for you short term. The most important point in organizing your financial records is to keep them all in one place.

Separate your financial records by category. Once you have your storage unit, get some letter size hanging folders and file folders. Plain manila file folders are fine but if you want to make things easier visually, buy colored file folders using a different color for each category. You will want to organize your financial records into these main categories in a hanging file: Receipts, Bills to be Paid, Paid Bills, Bank Statements, Brokerage Statements, Mortgage Documents or Lease Agreement for renters, Insurance Documents, Retirement Account Documents. Break down the main categories into sub-categories with file folders, i.e. Paid Bills file will have folders for each vendor such as Utilities, Telephone, Cable, Credit Card, etc.

Save all your receipts. Get in the habit of asking for a receipt with every purchase. This will help you reconcile your credit card statement as vendors can often appear on the credit card statement with a different name than the store name where you bought your item. Saving your receipts also helps you track your spending. Every day, put the receipts in the receipt folder in your file cabinet. Don't leave them in your purse or on the counter. File them as soon as you get home. The minute it takes to do this will save you time in the long run.

Write down everything you spend. One aspect of organizing your financial records is tracking your spending. Get a small pocket calendar or notebook and write down every penny you spend on the day you spend it. This may seem cumbersome at first but if you get yourself into the habit, you will see patterns emerge and will be able to see where you have spent too much and can adjust your budget. Write down everything whether you paid by credit card, check or cash.

Every month reconcile your accounts. Put aside an hour at the early part of the month and reconcile your bank account, your credit card statement , pay your bills and file everything in the paid folder. Go through your monthly receipts, you have gotten a receipt for everything, right, and file any items that may be tax deductible into a file in a hanging folder marked "Taxes". Again, within that larger hanging file make folders for: Medical Expenses, Professional Expenses, Childcare, etc. Believe me, organizing your financial records like this each month will save you hours come April 15.

Organizing your financial records may seem like a big task but if you follow these tips and develop these habits you will soon have more time and less stress.