Putting the Stereotypical Notion of a Tightwad on its Tush

MT Tips: Create A Financial Management System That Works For You

One of the greatest things about our move has been the chance to re-examine how we manage our financial information and paperwork. I couldn’t believe when I was going through our paperwork I found bank statements from a CD I had in 1992. Seriously! The IRS doesn’t even want to know about it but for some reason I’d never gotten rid of it.

Previously, I’d used my mother’s filing system. My mother is the most incredible filer I’ve ever met. I remember when I was about 20, we were going through some of her files of paperwork and she started giggling strangely; apparently she found the receipt for the hotel stay where I was conceived. Ten years, and quite a bit of therapy later, I’ve figured out that her system doesn’t work for me. She keeps a folder for every account that she’s pretty much ever had. When I tried that, I had too many folders for things I couldn’t even recognize when I was looking.

So what does work for me? I get expandable 13-pocket file folders for each year, one for personal, and one for business.(Additional ones for separate businesses or separate finances may be required.) Each of the first 12 pockets are labeled with the appropriate month, and contains a folder and an envelope. All financial statements and documents that should be kept go into the folder, and all receipts go into the envelope. Optimally, at the end of the month, I use the receipts to reconcile our statements, and dispose of any that wouldn’t be used for write-offs at the end of the year. More realistically, I go through the receipts every quarter. The thirteenth pocket is for tax documents at the end of the year.

So far this works very well for us; the file folders are very easy to transport and store, which is great since I have near ten of them. I had some investments that I will be writing off until the end of time, so I do have to manage more than the customary seven years.

What works for everyone is different. Some people sort by date, some by account, some by type of account. The important thing is to find a system that you can keep up with. It doesn’t do you any good to file things where you’ll never find them, or have a system that frustrates you so badly you’d rather let statements from 1992 sit in a box than file them.

3 Responses to MT Tips: Create A Financial Management System That Works For You

  1. This sounds like a good idea to me!

    I still need to get on this 'reconciling bank statements' thing. I look at them when they come in, but because I do so much of my banking electroncially, the statements don't present me with much value.

    though – I haven't really tried yet either.

  2. Great organization tip! I need to work on organizing important documents, and this is a wise system that I could see working for me. Thanks for passing it along.

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