Setting Up Household Filing Systems

Make it easy to keep household and financial paper flowing to the place where it belongs by setting up a three-part filing system to route paperwork. Action files provide short-term storage for items when action is needed; basic files offer ongoing reference to items when action has been concluded. Finally, classic files retain information you need in the long term. Together, these filing systems create a three-step conduit to prevent paper pileups and keep information flowing freely.

Action Files

When papers enter your home, each one requires an action, even something as swift and final as sending a credit card offer to the shredder. That’s why the first phase of an organized household filing system is the action file: a small set of files for incoming documents, grouped according to action.

Action files represent the intake step of the paper-filing process. Without regard to category, and without giving them a permanent home, action files nudge each slip of paper into the chute according to what type of decision or action you’ll need to take next with it.

A simple tabletop file holder is all you need to speed each new piece of paper on its organized way. Grab six to eight file folders or hanging files, and label them according to the action required. Some common action file headings are:

•  To Do

•  To Pay

•  To File

•  To Read

•  Contacts

•  Calendar

•  Waiting/Pending

•  To Decide

Some action file headings, like “To Do” and “To Pay,” are self-explanatory. A questionnaire you must return is a to-do item, while bills and credit card statements live in the “To Pay” folder until it’s bill-paying day. Information that you need to retain but that requires no further action goes in “To File,” while an article your mother sent you waits in the “To Read” folder until you have time to check it out. If your doctor has moved to a new office building, toss the announcement into the “Contacts” file, and add a save-the-date card for an upcoming family wedding to “Calendar.”

Watch out for the “Waiting/Pending” file. This folder exists to hold completed items that are waiting for a response, such as copies of a pending product rebate. When the rebate check arrives, it’ll be safe to toss the paperwork—but until that date, give it a home in the “Waiting” file, in case you need to follow up on a missing rebate.

By contrast, the “To Decide” folder holds items about which you need to make a decision. An invitation to a fundraiser you’re not sure you want to attend is a “To Decide” item. Keep this distinction in mind—use the “Waiting/Pending” folder when you expect a further response from others; use “To Decide” if you need to respond to something and need time to ponder what you yourself would like to do.

Once a week, sit down with the action file and clear it out. Pay bills, update the calendar, and check up on items in the “Waiting/Pending” folder; then send each item of paper to its next station: your set of basic files.

ROAD HAZARD

With credit card fraud rampant, set aside an action file just for receipts and dump them daily. When statements arrive, tick off the receipts against the bill to help you spot any fraudulent charges. Toss the small stuff, but retain receipts for big-ticket items, in case of returns or warranty work.

Basic Files

Basic files are closer to what we think of when we hear the words filing system. Separating bills, information, insurance policies, and correspondence into categories, basic files are home to papers that need no further action but that have to hang around for information’s sake.

To create basic files, start by establishing a few broad divisions that make sense to you. Big-picture categories such as paid bills, financial documents, reference material, and household information are typical categories for a basic file. Color-code file folders by category to point you in the right direction quickly.

Within each category, you will need to subcategorize as well. For example, a “financial” category might include separate file folders for bank statements, investment records, receipts, and tax documents. Household information might be subdivided into folders for product warranties, health records, pet records, and service agreements.

Overly complicated filing systems can be frustrating to use, so combine subcategories wherever you can. For example, file all credit card statements in a single “Credit Cards” folder; a folder labeled “Communication” can hold bills for landline phone, cable television, and internet service providers.

Play to your individual filing preference as you set up basic files. If you’re a filer, you’ll be more comfortable making filing divisions at a greater depth. People with piling tendencies see their comfort zone satisfied with larger, less complex groupings. Your goal is to be able to file and find any item quickly, but the level of complexity you need to do so will depend on your comfort level.

Store basic files within arm’s reach of your home office workstation. As you empty action files weekly, deposit each completed item straight into the appropriate basic file. To keep weekly filing simple, and because you may need to refer to items filed there, keep basic files stored close to your work area.

Classic Files

Classic files are the resting place for items that you must retain for a period of time but that you don’t expect to need. Income tax returns, paperwork related to a mortgage or car loan, and correspondence files with friends or loved ones should live out the remainder of their useful lives in classic files.

Classic file categories typically mirror the broad divisions of basic files, and duplicating the basic file setup makes it easy to graduate older items from basic to classic. You’ll stock classic files once or twice a year, generally at tax time, or at the conclusion of major transactions. As you sort statements or gather documents for the taxman, transfer older items to their corresponding classic file.

Classic files can be stored away from the home office, as long as they’re placed in a spot that will allow access with reasonable effort. Labeled records boxes work well to safeguard classic files, and stack and store easily.

ROAD HAZARD

Standardized lists of what paperwork to keep, and how long to keep it, are a lot like one-size-fits-all pantyhose: they don’t fit any individual person very well. Check with financial advisers to come up with a custom retention schedule for your household to be sure you’re keeping only those documents you really need.