Are you ready to knock out your financial clutter for good? Do you ever feel like you’re drowning in bank statements, tax documents, and miscellaneous data you’re unsure what to do with. Should you keep it, or trash it? File it, or shred it?
I remember before my Mom passed away, she struggled with keeping her finances in order. She tried her best organizing it all into a small file cabinet, but the financial statements just kept coming. After awhile, she couldn’t keep up. By the time she tried to get back on track, it was too overwhelming and the piles began to grow into the dreaded financial jungle of disarray!
I’m pretty sure my Mom wasn’t alone in this challenge. How about you? I faced these very same problems myself, but one day I sat down to figure it out. Yeah, I may be a little weird, but I’m a bit of an efficiency junkie. 🙂 With a little organization and a touch of technology, I figured out a way to eliminate financial clutter for good.
What’s the secret? KEEP EVERYTHING, BUT DIGITALLY. I’m going to share with you how you can literally keep all of your financial docs, file them, and have instant access to them quickly. The process is incredibly simple, but effective. It’s as easy as 1-2-3! No more piles of paper to organize, file, or sort through manually.
Below I’ll outline my process that I use throughout the year. I never have to worry about running out of file cabinet space… EVER. When its tax time, I send my CPA a digital PDF file of all the requested documents and I’m done. Here’s what I do.
What You’ll Need
- A System to Digitally Organize Your Files
- A Paper Scanner with Auto feed
- Shred box
The “How To”
1. A System to Digitally Organize Your Files
Being able to organize your documents is the first step towards eliminating the clutter. You can employ all the technology you want, but if you still don’t know where your files are, or have a good method of retrieval, you’re going to have issues!
I like using dropbox on my PC to organize my financial files. Dropbox is great because it allows you to keep your documents locally on your computer (install their desktop client), but it also synchronizes a copy into their cloud (ie. online storage) which is accessible from anywhere. Here’s my basic file folder structure.
As you can see I have several folders to organize specific areas of my finances. I file all of my related documents here including any online bank statements, bills, trade confirmations, etc. that I receive electronically.
*You can certainly use another cloud storage file system, or even run your files locally through a NAS (network attached storage), but I like the speed and reliability of dropbox currently. It’s also platform independent so you can use it on a PC, MAC, or mobile device. To download the Dropbox desktop app, click here.
2. A Quality Document Scanner
This next piece of equipment is super important. You will need a high quality document scanner. The goal here to be able to take any paper statements you get in the mail, dump it into the autofeeder, and SCAN straight to a PDF file. From there you can file it away into your appropriate folder.
I own a Fugitsu ScanSnap S1500 (newer model is the ScanSnap iX500). I’ve owned it for a few years now and CANNOT imagine life without it. It’s a bit expensive at ~$400, but worth every penny. If your budget is tight, you could try finding a refurb or older model, but again this investment is well worth the cost. It’s probably saved me days worth of time – literally.
(Checkout the Amazon Score! Yep, that’s a 4.7/5.0 for a piece of tech… unheard of! And it has over 2400 reviews. That’s incredible.)
Anyhow, this scanner is lightning fast and does duplexing (scans both side of a document simultaneously). It also includes a copy of Adobe Acrobat which is pretty great too. In addition to being able to create PDF files, you are also able to edit them and place secure passwords into the PDF itself. Checkout my post on online security to see why this is important.
Although the majority of my financial documents are already paperless, I still get my fair share of paper docs in the mail. I’m sure you do too… bank and credit card disclosures, HOA docs, invoices, alternative investments (for me this is real estate statements from my property manager), insurance documents, misc bank docs, etc., etc.!
What I like to do is organize the incoming mail over an entire week and then I’ll do a quick batch processing of all the docs over the weekend. It’s a lot more efficient than doing individual scans everyday.
As an example, here’s a 22 page income statement report from one of my property managers. I tossed the entire stack into the auto document feeder (ADF) and pressed the blue button.
Whaalaa! It starts scanning immediately and you’re quickly prompted by this status menu showing you the progress of your scan.
Upon completion of the scan (~28 seconds), a new menu will pop open and ask you where you’d like to save your file to. In our case, we go straight to the dropbox. (Keep in mind, this is with medium compression and OCR processing for the first page of the newly created PDF file).
Once you click the button, you’re taken to this menu where you’ll have the opportunity to change the save location, and/or change the file name. I will typically label anything I deem “important documents” and save them to their appropriate folder.
*If you do scan anything with your social security number, I would suggest password protecting it using Adobe Acrobat just for an extra measure of precaution.
Finally, here’s a quick time-saving trick to this part of the process. If I’m not dealing with a critical document (most aren’t in my opinion), I will simply scan it into my “MISCELLANEOUS” folder and leave the default name (the scanner software does this automatically for you). This way it’s literally a 2 button process which will really speed up things. The great thing though, is you’ll have it saved and searchable in your folder.
You can also get a visual preview of the PDFs which you can see here in my MISCELLANEOUS folder.
3. The Shred Box
Anytime I’m done scanning a document, it lands in one of two places. My file cabinet to keep permanently, or the shred box. As you might guess, 95% of my docs lands in the shred box nowadays. I only keep really important docs like titles, notarized documents, tax returns, etc.
Here’s my high-tech shred box! 😉
Again, I like to batch process my shredding, so when I’m done scanning, I simply chuck it into the shred box and forget it for a while. When it gets full (maybe every 6 months or so), I’ll either shred it myself, or take it somewhere like Goodwill who will shred it securely for me for a nominal fee.
Well, that’s pretty much all there is to the process! If you have any questions or need clarification, just ask.
Readers, what do you do to organize your financial clutter? Would a system like this work for you?