How do you organize your financial life?

Six years ago I was moving out of a college dorm room for the last time. This one wasn’t the worst move but I had accumulated tons of paperwork from my first credit card, brokerage account, retirement accounts, student loan documents, etc.

I wanted to have a better system to organize my “grown-up” financial life than tossing the envelopes and papers into a drawer. It took me several hours to finish this organizing project while watching TV and listening to movies. This is what I did:

1) I decided what organization system I wanted. Ifolder went to CVS and looked around their school supplies aisle. I decided on a folder with multiple pockets like this one: Multi-Pocket Folder (shown on left). Or google “multi-pocket folders” and you’ll find other types of folders. I paid about $5-7 for it. I liked that I could easily view all of my papers without having to punch holes in them like in a binder. Decide what works for you (remember that you can always change it up later).

2) I skimmed through every paper. I realized that some envelopes had been left unopened and unread in my desk drawer for months — I would not advise this. There might be errors or things that need action from you on a timely basis. Bank statements shredded because I had electronic statements available on the bank website.

3) While skimming, I sorted the papers into categories. The categories were and are to this day: Student loans, retirement, employment, health insurance, credit/bank accounts, tax documents. By the end of this I had separate piles for each category spread out on my floor. I think at some point I definitely wanted to quit from being so overwhelmed. If this happens to you, definitely take a break. Get a drink of water, take a walk. Or do this with someone you trust and then help them while they organize their own papers.

4) I went through each category and read through the papers more carefully. Some papers needed action, so I put them aside and took care of them at the end of this process. Then I organized the papers by date (by reverse chronological order, meaning most recent documents were at the top of the pile).

5) Each category of papers was put into a separate pocket of the folder. Closed and done. Whew!

I’ve maintained this system ever since that weekend afternoon. Now I read anything I get in the mail as soon as I open it, at least for a quick scan to know what category it goes into for future reference. If I don’t have time to put the paper into the correct category, I put it into an “inbox” pile next to the folder and process a bunch later during a free minute.

I eventually got a second folder and separated money categories (loans, retirement credit/bank, tax) from more general categories (employment, health insurance). I’m sure I will need to add more categories as time goes on, including disability insurance policies and a will. I go through the folders usually once a year and toss, scan, or toss and scan anything that I don’t need in the folder anymore (old health insurance policies or closed accounts).

Quick tip: After an event such as a phone call or paying a bill, I write the date, what I did, and what happened on the document or on a post-it and put it right on the paper for future reference. This habit has saved me time and confusion on several occasions.

The folders have been great because I have moved several times in the last six years. It’s a huge relief to have every document I need in one place. I can easily pack them away (example: I have moved apartments with them in my backpack because I wanted to keep them close during the chaos). And they are so light compared to a filing cabinet or box, which would be fine to use if you didn’t plan on moving in the near future (I might eventually change to this system).

Some books and posts I’ve read by minimalist authors have suggested scanning and digitally storing important documents to reduce clutter. I like keeping my papers as hardcopies but I have done this for some things because I wanted to have a copy of them just in case. And if a document comes to me in a digital format (usually a PDF), I don’t feel a need to print it out to put in the folder.

You can read more about reducing paper clutter here by reading Francine Jay at Miss Minimalist and Trent Hamm at The Simple Dollar.

I’d be interested to hear how others organize their important papers and document and would welcome suggestions as well!


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