There’s nothing like needing an important financial document only to realize you have no idea where it is. In fact, you can lose hours digging through boxes or sorting out your file cabinet, and still not come up with that much needed piece of information. Do you find it hard to organize your financial records? If you don’t have a system in place, now’s the time to create one.

How to Organize Your Financial Records

Organizing your financial records doesn’t have to be complicated. Consider the following when organizing your financial records.

Determine Where You Will Keep Your Records

The first thing you need to decide is where you will store your financial records. Ideally, you will pick a system that is easy for you to maintain.

File cabinet

You could go the traditional route and use a simple set of labeled folders in a file drawer. Categorize similar items together (e.g., banking, insurance, proof of identity) so that you will easily be able to find that document you need when you need it. Of course, one of the greatest drawbacks to this system is that of fire or another natural disaster. Keep those more important documents, such as birth certificates, social security cards, passports, etc. in a fire-resistant file cabinet, safe, or safe-deposit box.


Another great option for physical document storage is a binder. Use tabbed dividers to create categories and three-hole punch your documents for easy storage. Depending on how many documents you have, your binder may fill up quickly and you may choose to separate those categories into multiple binders. Once again, make sure you have those critical documents stored in such a way that they will remain intact in the case of a fire.

organize your financial documents in binders

Online Storage

If space is tight and you need to reduce clutter, you might consider electronic storage to organize your financial records. You can save copies of online documents or scan documents and convert them to electronic form. You’ll want to keep backup copies on a portable storage device or hard drive and make sure that your computer files are secure.

You could also use a cloud storage service that encrypts your uploaded information and stores it remotely. If you use cloud storage, make sure to use a reliable company that has a good reputation and offers automatic backup and technical support. Some cloud storage services even allow you to scan the documents from your phone and upload them that way. If you are looking for convenience and reduced clutter, it might be worth considering.

Consider Creating a Personal Document Locator

Another option for organizing your financial records is to create a personal document locator, which is simply a detailed list of where you have stored your financial records. This list can be helpful whenever you are trying to locate a specific document and can also assist your loved ones in locating your financial records in the event of an emergency. Typically, a personal document locator will include the following information:

  1. Personal information
  2. Personal contacts (e.g., attorney, tax preparer, financial advisor)
  3. Online accounts with username and passwords
  4. List of specific locations of important documents (e.g., home, office, safe)

Of course, your document locator may include additional items, so take the time to consider what will be important in the case of an emergency situation.

Documents to Keep

While many documents can be disposed of once the bill is paid, there are a few that you need to keep around, including:

  1. Tax returns
  2. Legal contracts
  3. Insurance claims
  4. Proof of identity

Create a category in your system for each of these so you are never caught off guard without them.

Length of Time to Keep Your Documents

Generally, a good rule of thumb is to keep financial records and documents only as long as necessary. For example, you may want to keep ATM and credit-card receipts only temporarily, until you’ve reconciled them with your bank and/or credit card statement. On the other hand, if a document is legal in nature and/or difficult to replace, you’ll want to keep it for a longer period or even indefinitely.

Some financial records may have more specific timetables. For example, the IRS generally recommends that taxpayers keep federal tax returns and supporting documents for a minimum of three years up to seven years after the date of filing. Certain circumstances may even warrant keeping your tax records indefinitely.

organize your financial documents

Listed below are some recommendations for how long to keep specific documents:

Records to keep for one year or less:

  1. Bank or credit union statements
  2. Credit card statements
  3. Utility bills
  4. Auto and homeowner’s insurance policies

Records to keep for more than a year:

  1. Tax returns and supporting documentation
  2. Mortgage contracts
  3. Property appraisals
  4. Annual retirement and investment statements
  5. Receipts for major purchases and home improvements

Records to keep indefinitely:

  1. Birth, death, and marriage certificates
  2. Adoption records
  3. Citizenship and military discharge papers
  4. Social Security card

Keep in mind that the above recommendations are general guidelines, and your personal circumstances may warrant keeping these documents for shorter or longer periods of time.

Out with the Old, In with the New

An easy way to prevent paperwork from piling up is to get rid of the old statements when new statements arrive.

For example, when you receive this year’s auto insurance policy, discard the one from last year. When you receive your annual investment statement, discard the monthly or quarterly statements you’ve been keeping. In addition, review your files at least once per year to keep your filing system on the right track.

Finally, when you are ready to get rid of certain records and documents, don’t just throw them in the garbage. To protect sensitive information, you should invest in a good quality shredder to destroy your documents, especially if they contain Social Security numbers, account numbers, or other personal information. Check with banks in your local area to see if they have a free or reduced-price shredding day for financial documents.

Organize Your Financial Records with an Expert

By taking the time to clear out and organize your financial records, you’ll be able to find what you need exactly when you need it. The easiest way to determine which financial documents are necessary to keep or get rid of is to contact an expert. If you need assistance reviewing and organizing your documents or making sure you are meeting your financial goals, contact us. While we are based in Ohio, we work virtually with clients across the United States and look forward to meeting with you.

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