3 Steps for Organizing Your Financial and Tax Records

Learn Money Girl's simple, 3-step system to help manage your financial records and stay organized. Plus, she reveals a great resource for determining which records you should keep - and for how long.

Laura Adams, MBA
8-minute read
Episode #384

Step #3: Purge Your Paperwork

If you’ve done a good job processing your paperwork, you’ll have plenty of items sitting in your “Shred” folder. Use a cross-cut shredder that makes confetti out of your documents, instead of the kind that cuts long strips of paper. If you don’t have a shredder or don’t want one, you can take a big batch of paper to a shredding service and watch them destroy your paper.

At the end of the year, do a big purge by emptying your binder and shredding unnecessary documents, or transferring them to your filing cabinet for long-term storage, if needed. Additionally, purge your filing cabinet each year of all documents you can live without.

Never keep the originals of important documents - such as paperwork with an original signature or notary seal, passports, wills, or birth certificates - at home. It’s okay to keep copies of these sensitive personal documents at home, just make sure to put them in a waterproof plastic bag and use a fireproof safe or filing cabinet that locks.

For your most important original documents, keep them in a bank safe deposit box. Never throw them away, even if you have a digital copy. You can get a small safe deposit box for less than about $100 a year at a local bank or credit union.

To know which types of physical and digital documents to keep and for how long, download the Records Organization Blueprint

How to Manage Your Digital Financial Files

For your digital files, be sure to store them in multiple places—such as on your computer, an external hard drive, and in the cloud—to make sure you never lose any data. Use a free service like Dropbox to easily store or share your files remotely.

Make getting more organized a priority right now! You’ll feel more in control of your finances, be better prepared for tax season, and make better decisions to improve your personal finances.

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Image of Girl and Light Bulb courtesy of Canva; images of papers flying into box and woman filing courtesy of Shutterstock.


About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.