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How to Organize Paperwork

How Long Do You Need to Keep Your Papers?

If you've been reading our articles you already know I'm a big fan of using three-ring binders over any other form of paper management.

I keep every bill I’ve paid for about five to seven years, which is what my accountant recommended. I don’t lose any time or space doing this and for me to go back through and pull out an invoice that’s been paid just because I don’t really need to keep it will take up more time.

Another option for keeping bills and records is to use a scanner. This is especially useful for little receipts you decide to keep.

And if you’re not going to keep backup files (too many people do not – and I suggest you do) then keeping important documents on your computer may not make the most sense.

I use three-ring binders religiously. I just think they’re one of the best and most underrated tools for paper organization.

It’s very easy to set-up a three-ring binder system to store a lot of your important paperwork. I like them better than filing cabinets, although like any organizing process I tell you about, it’s a matter of what works best for you and what makes organization easy.

First, one of the most important reasons for keeping documentation is for taxes. I recommend checking with an accountant anytime you’re unsure of a specific document, but the rule of thumb here is usually seven years.

In the US the IRS has three years to audit you from the day you file your returns, but there are also exceptions such as filing a false return or if you, for some reason, tried to avoid paying taxes you actually owed.

After the tax year is over, I remove the paper from the three ring binders and seal all the documents in 10 x 13 folders and use rubber bands to keep everything together.

Each envelope should be labeled for the tax year and for what each envelope contains.

Medical Bills

Another type of document people often have piled up in their files is medical receipts and proof of coverage. Anything beyond five years can be tossed aside and should probably be shredded, since medical receipts often include important personal information, like your social security number (if you're in the US).

I use a three-ring binder for medical expenses and insurance documents, too. You can even use one large 2 or 3-inch binder for all of your insurance paperwork, using dividers such as "medical coverage paperwork" followed by receipts for each tax year using dividers with labels.

Home insurance coverage information can also go in this same binder and five years is also the appropriate length of time you need to keep these papers. Some people keep them for ten years, and it's something you should ask your specific insurance agent about.

Major Purchase Receipts and Manuals

I use one three-ring binder for my product manuals, the invoices from the purchase of the product and any repair receipts.

Of course, you need a heavy-duty three hole punch because they're typically a little thicker.

Look for a three-hole punch to get through at least 30 pages of paper. A 72 sheet three-hole punch is around $90, which isn't cheap, although I've gotten my money's worth from mine.

I find it the easiest to keep all of these major purchase items together in the same binder because you may need to reference some of the information for warranty information. Even if you sell something later, it’s more valuable with this information included.

Another option: if you don't want to use a three-ring binder, you can use a filing "crate" and use it only for manuals and the receipts. You should label it and keep it where it's easily accessible.

I also staple the warranties right to the front of the manual for the specific product, along with the receipt.

If you don't send in warranties because you don't want them having your personal data, you'll miss out on any recall or repair information coming directly from the manufacturer.

What about pay stubs?

You should keep them until the end of the year. Always double check the numbers match and shred everything but your final month of pay, or even your last two or three stubs to make sure the end numbers match.

What about all the tiny little receipts?

You should tape them onto a single sheet of paper and file the sheet with the rest of the "bills paid" binder under each month (if that's the filing system you're going to use).

Another option is to have a specific envelope and write the month on it and three-hole punch the envelope and put it in the binder that way.

I still like the idea of taping them all to a piece of paper and filing it that way.

Utility bills

Once you set-up a binder or filing system, I don't think it takes up too much space keeping the small amount of utility bills you get each month.

The rule of thumb is roughly three to five months, but it doesn't take up any more space keeping them for the entire year.

Mortgage Paperwork

You should keep your mortgage paperwork for up to ten years.

You'll often hear less but in my opinion this is real big purchase documentation. If you're keeping paperwork for the $48 cable bill, then I think it makes sense to store the mortgage documents in a safe, accessible storage area.

I keep a lot of my paperwork, but the key is keeping it neat and organized and somewhat portable, which is why I like using three-ring binders.

Some documents should be stored safely, such as your social security card or even life insurance documentation. A fireproof safe is usually worth the investment, but you might also prefer to keep your highly important documentation in a safe deposit box at the bank.

Just keep in mind, the more you can file away neatly, the easier it is to keep and maintain files.

And some of these items may never be of use to you again, but it's not like a shirt where you can just get another one.

Important documents need to be stored and filed properly.

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