Organize your financial life

By Liz Pulliam Weston

Bill Hawkins of Aubrey, Texas, once bought 12,000 pounds of concrete for a backyard project -- a purchase that qualified him for a $372 rebate. But somehow, he never quite got around to sending in the paperwork before the offer expired.

"Now that's $372 I'll never get back," Hawkins said. "By the way, the project turned out great. But I still hear about that $372 from my wife every time we are in the back yard."

You probably don't need a spousal reminder of the times you've blown it big time with paperwork -- the rebates you failed to redeem, the items you couldn't return because the receipts disappeared, the deductions you lost because you couldn't prove them. (Or maybe you took the write-offs anyway and live in fear the IRS will call you on them.)

Filing systems aren't exactly sexy. But how you manage your receipts, records and other paperwork can make a big difference in your financial life.

Why filing systems fail

An effective system can help you cut your taxes, track your spending and ensure you get every dollar that's coming to you from returns, rebates and job reimbursements. Disorganization can leave you poorer, frustrated and hanging in the wind should the tax man come to call.

Professional organizers say paperwork systems often fail for the following reasons:

They're not comprehensive. Think about what paperwork or transactions frequently fall through the cracks. Do you lose receipts? Fail to pay bills? Search endlessly for documents? These problems identify the holes in your current approach and reveal what you need to account for as you're overhauling your system.

After letting more than 100,000 travel points expire, Cathy Connors of Houston signed up for monthly e-mail reminders from her various airline and hotel reward programs.

"This reminds me to review my total, check out any new rewards that I can get and decide whether to use my points or keep them and continue to accumulate more for other things," Connors said.

They're too complicated. Debbie Stanley, author of "Organize Your Personal Finances In No Time," tries to teach her clients the concept of "organized enough." A system that's too elaborate will be hard to follow, not to mention a waste of your time.

Debbie Barnes of Port Robinson, Ontario, has learned to keep it simple. Every January, she hangs a manila envelope on her home-office wall to catch tax-related receipts.

"The best part is once the item, whatever it is, is filed, it is out of my head," Barnes said. "I don't have to think about it until I sit down and sort through the envelope."

The user isn't consistent. The best paperwork scheme in the world won't work if you don't follow it. Making time to handle your paperwork, and doing things the same way each time, will help you keep control.

Stanley, for example, said she had to train herself to always put receipts in her wallet, rather than jamming them in her pockets or leaving them in shopping bags. Doing so consistently helped her corral the paperwork that otherwise would disappear between the store and home.

It's also important to stay on top of your paperwork. A few minutes spent each day clearing off your desk and filing papers can keep your system working, said Maria Gracia, editor of the Get Organized Now Web site.

Find the right system for you

You may need to let go of the idea that there's one "right" way to organize your paperwork. An arrangement that might work well for you might be too elaborate -- or not elaborate enough -- for someone else.

Take receipts. Sue Langston-Ames in Wichita, Kan., was constantly losing them because the place she usually put them, her wallet, quickly became overstuffed. Receipts would fall out, or there wouldn't be room for new ones.

Then she realized each of her purses had a side pocket with a zipper.

"I now put all my receipts in the zipper pocket in my purse," Langston-Ames said. "Bingo! No more bulky receipts in my wallet driving me nuts -- and I have a safe and non-messy place to put my receipts."

Others may find they want a little more organization. I hated having to sort through a wad of receipts, so I started doing more categorization up front. As I get receipts, I now put them in one of three wallet compartments: I put long-term receipts, like those for taxes or big purchases, in one part. Action receipts (for rebates or reimbursements) go in another. And temporary receipts, like ATM and most credit-card slips, are placed in the third.

Every few days, I dump the long- and short-term receipts into the appropriate file folders and take any required action on the rest.

A friend of mine goes much further -- by stapling tax-related receipts to the credit-card statements to which they belong. I think that's overkill, but it's a system that works for him that he's been consistently following for years.

Continued: An easy bill-paying system

 1 | 2 | next >