Money & Career

How to organize your financial clutter

We asked the president of Professional Organizers in Canada what papers we should keep, toss or file.

Masterfile

Do you have receipts in the hall, tax forms in your purse and aging bank statements in your car’s glove compartment? It’s easy to feel overwhelmed by all the financial paperwork required to keep the average household ticking. Yet de-cluttering your stacks of bills, warrantees and insurance papers pays off – literally. By trading in chaos for control, there’s less risk of identity theft and late bill fees.

“I know it can be intimidating when you have this much paper, but setting up a system is one of the easiest things you can do to feel on top of your finances,” says Kristie Demke, president of Professional Organizers in Canada, from her office in Edmonton.

We asked Demke to give us the low-down on how to organize papers like a pro.

First things first
It’s not going to be pretty, but you’ve got to start somewhere – and that somewhere is your home. Grab a large bag and hit every room, picking up the papers that have collected over the past few months (or, gulp, years). Empty your purse and wiggle under your car seats looking for gas receipts. Now throw on relaxing music and head to the living room to dump the stash.

Roll up your sleeves

It’s time to get sorting. Pick up each paper, one at a time, and place them in piles. For instance, utility bills go in the utilities pile. House insurance forms go in a house insurance pile. Don’t forget warranties and instructions either. Demke advises that her clients create a file for all these forms and brochures so you’ll always have them close at hand if the nine-month-old snow blower goes bust in January.

File it or lose it
“The filing cabinet is our friend,” insists Demke. So if you don’t have one yet, run out and purchase a cabinet that will give you plenty of room to grow. Or simply pick up an accordion filing system. You can always move into a bigger cabinet later.

When to toss

Many of us become secret paperwork hoarders simply because we’re too afraid to chuck anything out. What if we need that 2003 credit card statement someday? Relax, says Demke. Most papers can be shredded and thrown out after only a year or two, and some can even go in the trash next month.

•    Pay slips. Keep these only until your T4 comes in the mail, check them against the tax statement to make sure everything matches, then it’s bu-bye.
•    Credit card statements. Unless you own a small business and are required to keep statements and receipts for at least six years, you can shred statements as soon as you’ve matched the numbers to your receipts and paid the bill.
•    Utility bills. Keep for a year to compare them to the previous year. Plus, if you’re thinking about selling your home, prospective owners like to see old bills .
•    Insurance policies. As soon as your updated policy comes in the mail, chuck the old one out. You only need the most recent copy, says Demke.
•    Wills vs. bills. There are some things you should never throw out. Keep marriage licenses, birth certificates, wills, adoption papers and death certificates in a safety deposit box.

There. Feel better? Just remember to update your filing system once a month to give all your papers a good home.

Kira Vermond is a freelance writer and author of Chatelaine’s own Earn, Spend, Save: The savvy guide to a richer, smarter, debt-free life (Wiley, 2010). You can also listen to her career and money advice on CBC Radio weekday mornings across Canada.