Have you had enough with paper clutter, paper filing systems and bulky file cabinets? They seem so, well, 1990s, don’t they?
Dream for a minute of having all of your files safely stored online, and having only one small accordion file for the few papers that are left. Dream of the space you’ll free up from having no file drawers and no complicated filing systems. Don’t you love it?
If you haven’t done so already, here’s how to set up your all electronic filing system that’s safe and easy to reference and/or share with your tax accountant:
- Buy a scanner. To switch from paper filing chaos to organized electronic filing bliss, you’ll need a basic home scanner so that you can scan paper documents directly into digital format as you receive them. My system is to store all files and documents on my computer, except for originals like my car title and birth certificate, which I keep in a fire-safe locked safe. You can also use a cloud-based tool like Dropbox and then you can access it anywhere.
- Sort smart. Begin by sorting documents into broad categories, such as ‘Finances’, ‘Work Documents’, ‘Insurance’, ‘Health Benefits’, ‘Retirement’, ‘Home Documents’, and ‘Automobile.’ Some broad categories may require sub-folders, such as ‘Checking Account’, ‘Savings Account’, and ‘Credit Card Account’ under Finances, and ‘Car Insurance’ and ‘Life Insurance’ under Insurance, and so on. Be consistent when you name your files and documents, with the same name for the same statements and the month/date of the document, so that you can easily search for and find them later. For example, name all of your bank statements “Checking Account Statement” followed by the date (i.e. 4-2016). If you change it up, such as naming some “Chase Account April Statement” and “April Bank Statement”, you’ll confuse your system and make it difficult to find things.
- Set up paperless… everything! These days, almost everything can be sent to you in digital format, such as bank and insurance statements and notifications. Use one email address for these so you’re not hunting through different email accounts to find what you need. Then file them electronically on your computer as I described above, or on a cloud filing system such as Dropbox. Remember the accordion file I mentioned at the beginning of this post? That’s for the very few papers that you should keep in hard copy, such as your insurance policy or passport. You may even be able to electronically store your home ownership documents – check with your lender. Even the IRS doesn’t mind if your documents are paper or electronic. As for doctor bills, once they’re paid, you really don’t need them except for reference if there is a discrepancy. So if you want to keep them, just scan the bill after it’s paid and file it electronically. There is no need to keep the paper statement. In large part, if you get into the habit of scanning EVERYTHING and then shredding/recycling the paper copies, you’ll never have a paper clutter problem again.
- Organize your email flags and/or folders. Use your email account to facilitate your electronic filing, by setting up corresponding folders and/or flag colors to match your broad categories from step #2. It’s fairly easy to set your email provider (i.e. Google/Gmail) to automatically sort incoming emails into your organized folders for you, but if you don’t know how, search the internet for the phrase, “how to create a rule to sort ________ (Hotmail, Yahoo, AOL, etc.) emails”.
- Don’t procrastinate. Scan and save important documents to your computer filing system as soon as you receive them. Or, if it works better for your schedule, set a time each month that you dedicate to scanning, filing and organizing any important documents you have received in the past month. In the meantime, keep all unsorted documents in one of two places: one folder or bin for paper documents that need to be scanned and filed, and another folder on your computer for digital files that need to be organized.
Now that you’re moving to an electronic filing system, you should also consider a few things to protect this sensitive and important information:
- Encrypt sensitive files. This includes documents such as identification, tax documents, bank statements and so on. This way, if your computer is stolen, your sensitive information will not be easily accessible. Click here for a how-to.
- Back up your files onto an external hard drive. Let’s be honest, technology still fails us, and it would be quite a mess to recover all of the now-organized files if your computer were to crash or break down irrevocably. So if you don’t use a cloud filing system like Dropbox, then every six-twelve months, you should back up your important files to an external hard drive, so that you can recover them if they are lost on your computer. Click here to learn how.
Say goodbye to paper clutter!