After collecting your documents for filing your taxes, you have a great opportunity to organize your reference files. These are papers usually found in your filing cabinet or boxes that you need to keep for a certain length of time but not forever. Receipts, paid bill statements, payroll stubs and financial statements are examples of these papers.
One good rule of thumb is to permanently save the end-of-the-year statement from financial institutions and employers. But the verified monthly statements or updates for the previous year can be bundled together and kept out of the current filing system somewhere else in the house. Every year those can be replaced with the updated papers from the more recent year and then shredded. Any verification or reconciliation requiring them would normally be passed in that length of time.
In addition, computer and/or online records are now kept by almost all institutions making it possible to track down information you may need in the future. Keeping every statement or purchase record indefinitely is not necessary and can create clutter and confusion in your paper filing system. This makes it harder to find what you really do need.
An inexpensive and simple reference filing system that anyone can use is found in the chapter on paperwork in my book, complete with sample pictures. It does not require any special supplies and can be adapted to any categories or filing preferences. And I am always available by phone or email.
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