I am always asked by clients whether or not it is good to have “too many files” and most people “over file” (which means they have a file for everything rather than in general). I advise you to start with the following hanging file folders so here is a pretty simple and somewhat Foolproof system:
Indoor File (cleaning service, appliance repair, security system, etc.)
Outdoor File (landscaper, Trash company, etc.)
One file for each family member – eventually you might want to break these files down to individual Doctors, Dentists, etc. Remember though, Social Security cards & birth certificates should be in your fireproof safe.
One for each utility company (Telephone, Gas/Electric, etc.)
Auto & Homeowners (or Renters)
File by year and then break down into 2 files from there titled:
Year Taxes (Example: 2011 Taxes)
Year Donations (Example: 2011 Donations)
Expand on this as necessary. You might have another house, you might travel frequently and need one for your frequent flier information. You also might have a boat in which you can add the insurance in your insurance file right away. You could also just have a “Boat” file too.
Files are a fluid concept and will need tweaking from time to time as your life changes. Also, now a days we are able to download our bank statements online and therefore don’t need to file years of bank or investment statements anymore (yippee). I recommend downloading and saving anything that you can on your computer and you can use the same system above for your “digital” files as well.
I hope this motivates some of you to get started on your filing. It isn’t my favorite task but it is definitely one that is important. I think having my filing done is a really good feeling.
Does this motivate you to get started?