This is a guest post by Matt. His info is at the bottom of the post.

The major reason that financial records become unruly is the lack of a specific place to put each document. By the time effort is applied to gain control, the mess is so deep it seems impossible to conquer. The best approach is to set aside smaller increments of time to tackle each area within the room where all the paper has accumulated. Apply these tips and work consistently over a period of weeks to clean out the old and organise what must be kept while including new arrivals.

1. Know the requirements. Refer to government regulations to determine the length of time to keep tax records and supporting documentation. All other information can be evaluated for personal preference. Bank records are no longer necessary in paper form because most banks have converted to long-term electronic repositories for customer access of account records. Automobile maintenance records, medical records, payslips, and home maintenance records can be kept for appropriate time periods, but should be purged periodically.

2. De-clutter prior to filing. Set out three open boxes that will serve as trash, recycling, and shredding collectors as each drawer is cleared. Empty every drawer and eliminate all paper that is no longer necessary. Look for personal information and ensure that all those documents are placed in the “shred” box. While cleaning out paper from various collection areas, throw away empty packages and pens that no longer write. Take this opportunity to de-clutter the entire office area.

3. Choose a quality cabinet. Drawers where files are to be stored must be durable enough to handle substantial weight. If the current storage place is rickety and is to be replaced, choose a cabinet with enough space and sturdy hardware to be opened and closed without much force applied. Purchase enough filing supplies to complete the sorting and organising without stopping in the middle.

4. Design a working system. Group documents in large categories that are meaningful. Dates are most important for tax documentation and medical records. Other categories can be grouped by type for easy storage and retrieval.

5. Gather long-term items. Separate the legal documents that must be kept permanently. Irreplaceable documents must be kept in a fire safe or safe deposit box. Wills, divorce decrees, property deeds, birth certificates, and any other significant document must be protected from loss. Annual review of these documents insures they are accurate and present over the years.

6. Sort items to be referenced. Files that must be accessed within the next twelve months are to be filed at the front in a meaningful group. Receipts should be organised as purchases are made to make tax time easier. Bills should be organised and kept in a file that is visited at least weekly to prevent late payments. Use a colour coded file set as a reminder to visit this set of information often.

7. Shred sensitive information. Whenever old documents are removed from the existing files, shred any piece of paper with personal information including addresses, phone numbers, and personal identifiers. Replacement versions of legal documents should be the trigger to shred old copies.

8. Acquire safe storage. Purchase a fire safe or rent a safety deposit box to house the irreplaceable documents. In locations where natural disasters occur more often, the better choice is a safe deposit box.

9. Use electronic documents. Instead of keeping months of bank statements, switch to online access to bank statements and records. Refer to online receipts for purchases. Use software to file taxes and keep paper copies of only the receipts. Take periodic backup copies of all information on the personal computer in the home office. Store a copy of the backup in the fire safe or safe deposit box.

10. Create a master sheet. Once the filing system is organised, take some time to create a master sheet that explains what each file contains. Use general terms and ask another person if the sheet makes sense. Store this sheet in a plastic sleeve in a visible place for the convenience of someone who might have to access your files in your absence.

If conquered in small increments of time and effort, any paper mess can be made into a meaningful filing system where financial records are easily accessed. Every decision must be personally meaningful and there are not specific rules that help every person to be more organised. Make the system usable and easy to update, and your records will stay in order for years to come.

Matt is part of the team at CreditCardCompare.com.au, an impartial service that reviews credit cards and provides innovative tools to help make it easier for Aussie consumers to find the best offer that fits their needs.

Tags: decluttering, organizing, Personal Finance