Financial File System

Wed, May 6, 2009

How do you manage and organize all of the financial documents and records for your family? If you’re like most families, it’s difficult to organize bill statements, mortgage statements, account statements, wills, insurance information and more.

Most financial documents end up in a large pile on the home office desk or kitchen table causing us to spend more time looking for the information when it’s needed than would have been taken to file it in the first place. Worse yet, some important records are accidentally thrown away in the garbage.

Financial file system

I thought I would share an excellent financial file system that has worked well for organizing documents and records for our family. David Bach helps you create a FinishRich File Folder System in his book Smart Couples Finish Rich: 9 Steps to Creating a Rich Future for You and Your Partner.

As a side note, this is a good book to help launch better personal money management and learn some essential basics of personal finance. I particularly like how Bach talks about identifying your financial goals based on your life values.

In the book, Bach identifies several files as a part of his system. Below are the categories we have chosen to create for our family which you may find helpful. We have a hanging folder for each category and files within each folder.

Financial file system categories or files

Tax Returns: Create 7 files to store the last 7 years of tax returns which is how far the IRS can go back for an audit.
Retirement: Create separate files for 401k, Social Security, IRA’s or other retirement accounts.
Investments: Create separate files for each investment account or investment. For example, include mutual fund statements in this folder.
Savings and Checking: Create files for each checking, savings and money market account statements.
Home: Create files for home owner association statements, home taxes, mortgage statements, security and other areas related to home ownership.
Credit Cards: Create a file for each credit card account. Keep a copy of each statement to make sure all of your payments have been applied correctly.
Car Loans and other Liabilities: Create files for each for each car loan and other liabilities.
Insurance: Create a file for life insurance, health insurance, car insurance, homeowner insurance and any other type of insurance you own.
Family Will or Trust: You should have a file for all of your legal documents.
Bills: Create a file for each of your monthly bills statements which do not include liabilities. Examples of these files are electric, house phone, cable/satellite, cell phone bills.
Medical: Create one file for your medical statements or copies of paid bills.

Believe it or not, it’s still easy to let your financial documents pile up somewhere in the house after you’ve created your financial file system. That’s why I recommend purchasing a portable file that can be kept in a convenient location.

Carve out 30 – 45 minutes to put the system together. Once you’ve created it, it’s just a matter of dropping your documents into each file (a few minutes each day) as you sort through the mail at the end of each day.

What are some other tips for organizing your financial information?

Tags: Financial File System, Finishrich File Folder System, General, Organize Bill Statements, Organize Documents, Personal Finance