January 17, 2019

Organize and file papers with a simple filing system


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Today I want to show you how I organize and file papers after I shared with you last week, what the biggest mistake is most people make when they try to tame their file monster. If you missed that post, you can read it here, in short I said: 

Don’t start sorting and decluttering your papers before you have a system in place, and most importantly, put the newest papers through this system first.

Now that you know what not to do, lets explore how to organize and file papers and how to put a simple system in place that tames your file monster. 

By sorting and processing your papers they travel from the temporary home to the permanent one. Below I share with you my filing system, I hope it helps you figure out the filing system that works for you. 

Filing and Processing System

Especially in the beginning, the simpler you set up your system the better. If you try to come up with a complete and sophisticated system you are setting yourself up for failure. 

We humans don’t like change that much, and too big of a change is very hard to sustain – so start small and simple. 

Step 1: Your papers need a home: 

  • first a temporary home where they wait to be processed (you could call this an Inbox) 
  • then a permanent home for the ones you want or need to keep.

Step 2: Establish a simple sorting/processing system

  • When papers enter your life, you put them into the Inbox (temporary home) 
  • At least once a week you empty the inbox and sort the papers by category (to do, to file, to pay etc) 
  • Then you do something with the papers (you pay the bills, you review the contract, you enter it into your bookkeeping system)
  • When done you file the files you want and need to keep and you get rid of the rest (recycle, shred)

This week let’s explore in more detail how step 1 of such a system can and should look like. First off I'd like to say: 

A filing system and record keeping does not have to be fancy and it does not require expensive technology either. But what you do need is a willingness to do it.

A lot of people feel huge resistance towards getting papers organized. I get it, it’s really not the most exciting thing to do in life. 

But what can be exciting is, when you don’t have to frantically search for important papers when you need them, when you don’t have to spend hours and hours trying to get your papers together for your tax return, when the stress, overwhelm and frustration relating to papers is a thing of the past.

A Temporary Home For Your Files

The very first step to organize and file papers is to set up a temporary home for them. This is a place where you put all papers when they enter your life. I call this

The Inbox 

It can be a letter tray that you buy at an office supply store, it could be a pretty box that someone gave you or it could be a cute basket. What ever works for you and is big enough to hold a maximum of 1 week worth of papers.

Now you ideally position this Inbox, near the door through which you bring most paperwork into your house. You want to be able to put the papers in the right spot without making a detour on your regular route through your home.

Now you get into the habit of putting all papers that enter your life into this box/basket – no exception.

If you do just this one step you will tame your file monster big time.

Gone are the times when your dining room table is covered in papers, or your handbag is bursting of unopened mail that you stuffed in there. It all has a home now, the Inbox. 

When you train yourself to put all papers there, it also means that you will find it there when you are ready to process it. (we talk about step 2 and the simple file processing system next week).

A Permanent Home For Your Files

Now it's time to set up a permanent home for your papers, a filing system. This is where a lot of people get confused and don't know where to start. There are various options on how to set up your filing system and there is no one-system-fits-all solution. 

The perfect filing system is the one that works for YOU.

In order to figure out a good paper processing and filing system let’s explore first what type of papers come into your house that you need to process and that would need to live in a filing system. 

3 Types of papers and documents

I differ between three types of papers and files that need a permanent home and for each type I use a different kind of filing system. Let's first look at the different types of papers: 

  1. Current, or this years papers, for example this years receipts, this years bank statements, this years insurance policies and also this years files for filing your tax return. 
  2. Permanent and important documents like contracts, insurance policies, certificates, wills, deeds, warranties etc. I wrote a separate blog post on those here: Important documents: identifying, protecting and storing them
  3. Tax Papers, those are copies of filed tax returns that you need to keep for a certain period of time (7 years here in Canada)

Different Filing Systems for different types of papers/files

I use a different filing system for each of the three types of papers. The reason is speed, accessibility and convenience. Here is what I do: 

Binders for current papers

Current papers need to be handy, you might need to refer back to them on a regular basis or you might have to do something with them again,

That’s why I keep my current papers in binders. I like binders, I find them to be very handy, easy to handle, and easy to store current papers. 

I have a binder for our private papers and one for each of our business files. If I need to look something up I grab that binder and all is in there sorted by category. 

Categories for current papers

Depending on how many current papers you have for one full year, it's a good idea to sort them into a few categories. Not too many categories, that could get confusing, just enough to find things easily.

I have an 8-tab index in my binders but I only use 6 of the tabs to sort my papers. Here are the categories I use: bank/credit card statements, household, cars, animals/pets, renovations & maintenance house, miscellaneous. 

Pro-tip for filing in binders:

Always put the newest paper on the top (in the front) within your category. This saves you time and unnecessary flipping papers back and forth. 

If you don’t like binders another option is to use an Accordion File, an envelope for each category or a (pretty) box with dividers. As I said before, the perfect filing system is the one that works for you and also the one  you will use

Hanging files for permanent/important papers

I keep those in a filing cabinet sorted by category and not in binders. One reason for this is that some if not most of those papers you need to keep in good condition and therefore you don’t want to punch holes in them,

If you prefer binders, you could put each paper in a file savers instead but to me that is awkward and too time consuming, I prefer hanging files instead. 

For each category of files I have a hanging file, so for example:

  • Bank account contracts
  • Credit card contracts
  • Insurance policies (here I divide by health insurance, car insurance, house insurance)
  • Health records (one hanging file per person)
  • Pet records (one hanging file per pet you own)

Just like in the binder, don’t make too many categories at least in the beginning. Start with just a few.

Down the road when you found your system and rhythm you can always divide a hanging file into two or three separate ones if you find that it gets too thick.

Filing and Storing Tax Papers

Those are the copies of your filed returns with all the backup paperwork and information. Here in Canada we have to keep them for 7 years.

I put each year in a separate poly report cover and store those in a hanging file system by year and by person. 

Most of the time you don’t really have to access those papers (unless you get audited), so just keep them in a safe place (Zone 4 if you have your home and office set up with zones). 

Here you go, how to organize and file papers. My filing system is really simple and I highly suggest you keep yours simple too. It's easy to maintain and it's easy to find what you are looking for.

Your file monster is finally tamed 🙂

No, wait, one last thing we need to discuss: 

How to file digital files

Since we are living in a digital world now you most likely have some or almost all papers entering your life in digital form.

My rule is, if it comes in digitally, I file it digitally, I don't print it out (there might be the odd exception). If it comes in physical paper form I either

  • file it in paper form (see above) or 
  • I scan it in and file it digitally only or 
  • I scan it and file both, the paper version and the digital version

If you do have current files either in paper or in digital form, it's important to have the same structure on your computer drive as you have for your physical papers in your binder (accordion file or box). 

The filing system on my computer drive mirrors the categories in my binders and hanging files. This helps speed things up when I am filing and also when I need to find specific receipts and files again.

OK, there you have it, my filing system in a nutshell. Next week we look at the file processing in more detail, this is basically the journey your paper makes from the temporary home to the permanent home.  

Let me know in the comments below if you have any questions or let me know what filing system you have come up with. I'd love to know. 

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