Filing System University
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Setting Up A Filing System 101
Courtesy of FreedomFiler® by Seth Odam, Copyright © 2020.
The Secret To Success
It’s not your fault if you feel frustrated by filing! Most filing systems take too much time to file, hide the papers you often need, and require unnecessary maintenance. It’s no wonder many of us resort to paper piles! The problem is not with you; it’s the filing system you’re using. The solution is to eliminate all file maintenance, reduce your file time dramatically, and accelerate retrieval of papers needed for routine tasks. You can quickly learn the essential paper-sorting techniques, how to stay on top of action files, and ultimately how to set up your own self-purging reference file system. All it takes is a little know-how!
Simplify With The Art Of Filing
No matter how much paper you have to sort through, there are only three kinds of paper. ‘A’ is for Action. Action files are for papers that require immediate action or follow up, such as bills to pay. ‘R’ is for Reference. Reference files are for papers that you want to save for future reference. ‘T’ is for Trash. Trash is for papers that can be thrown away (or shredded and recycled). Always keep these three kinds of paper separate (A.R.T.) and you’ve won half the battle!
Keep Action Files In Sight
Papers that require action or follow up are best stored in a vertical slot organizer on your desktop, an open filing rack, or a portable expanding wallet for papers. Ideally you can label the slots from the side (facing you). Action files can be organized by category or by date. Categories may include “Bills To Pay”, “Letters To Write”, “Calls To Make”, and so on. Dates may include days of the month, “Days 1-15”, “Days 15-31”, and “Future”. At the end of each month review your “Future” file and decide what papers to deal with in the upcoming month. Papers that are extremely urgent may be placed on your desk right in front of you—to be dealt with immediately. A good action file system allows you to spread out things to do over time and prevents having to search through paper piles each day just to decide what to do!
Always Knowing Your Next Step
Whenever you set aside a paper to be dealt with at a later time, write directly onto the paper or attach a sticky note to remind you specifically of the next step to be taken, and any deadline date. For example, often you are blocked from completing a task because you require more information to make a decision. You may write “Call so & so and ask about blah, blah…” Later on, this will save you re-thinking why you set aside a paper in the first place. For bills to pay, consider stripping irrelevant advertisements and then noting the due date on the outside of the envelope, “$145 Due 3/7”. If you keep a task list or calendar, you may enter a “to-do” item there as well.
Sort Paper Over The Trash
The bigger the trash can the better! Remember, less is better, and the good life doesn’t come in the mail. Unfortunately, used car salesmanship has become the gold standard. If you see an envelope that says “IMPORTANT! Immediate Response Requested! OPEN IMMEDIATELY!” throw it away immediately. Most advertising is designed to make you feel afraid that something will be missing in your life if you do not respond to an offer when, in fact, the opposite is true. The simpler your life is the more you can enjoy what matters most to you.
Set Up A Self-Purging Reference File System
Saving files for future reference is essential, but unless you create a maintenance-free reference system you're going to find yourself constantly cleaning out your filing cabinet, having to set up new folders, and not having the right files at hand when you need them. The answer is to divide your filing cabinet into four sections, color-coded if possible: GREEN for monthly miscellaneous transactions, BLUE for tax-related transactions, RED for permanent family and property records, ORANGE/YELLOW for current policies, agreements, and up-to-date administrative files. You may set up an optional fifth section in PURPLE, for saving literature, articles, and notes. The main sections are called Monthly, Tax, Permanent, and Remove/Replace, and the optional section is called Resource, all described below.
A True Filing Champion: 24 Month Rotating “Catch All”
Most household papers can be filed by month. This will dramatically reduce the time and energy required to complete your routine filing. Use 24 sequential hanging files labeled by month “January”, “February”, etc., providing two full years. One year is labeled “EVEN YEAR” and the other “ODD YEAR”. The current month file is where you will file petty receipts, paid bills, personal account statements, and all miscellaneous items that don’t have a home, or papers you’re just undecided about. When a year fills up, move all folders to the back or to a second file drawer. Bring forward the folders from the previous year and re-use one month at a time. Each new month, automatically empty out papers left over from two years ago. By keeping two full years you will never accidentally throw away any papers that could be needed for filing taxes.
A Monthly File Marker Is Your Best Friend
To mark the current month folder, place a small binder clip onto the tab of the folder. Use a binder clip with a bright color that can be opened and closed, so you can move the clip from month to month and it will stay put. Filing most of your household papers will be as easy as dropping papers into the folder with the clip. You can even train your pet to do your filing for you!
You Can Always Be Ready For Taxes
Set aside any tax-related documents you accumulate during the year in a dedicated section of your filing drawer. Set up tax folders according to your tax needs. You may only need a single folder for your W-2 and any miscellaneous deductions. On the other hand, you may create separate folders for itemized deductions or for home business receipts. For example, “Medical Expenses”, “Charitable Contributions”, or “Business Bank Statements”, “Supplies”, and so on. Refer to you most recent tax return to see what paper records were required. Don’t worry, you can always adapt your tax folders later if you are unsure. This will help speed up your tax preparation the following years. (Note: if you use software to categorize tax related expenses, you may file receipts by month, or by vendor A–Z in a special tax area, separated from personal bills and receipts)
Duplicate Tax Folders Save The Day!
Keep a second, duplicate set of your tax folders. Label one set “EVEN YEAR” and the other “ODD YEAR”. Doing so will allow you to keep tax receipts from last year separate from this year. Place your current year tax folders in your nearest filing drawer just behind the year’s month folders. Each new year, simply swap the position of all “EVEN YEAR” and “ODD YEAR” folders. Last year’s folders will be moved the back or into a second file drawer, waiting safely until the time when you are able to prepare your taxes. After filing taxes, you will empty your tax folders and move all supporting documents into the tax archive, allowing those tax folders to be reused the following year. There is no need to review and purge documents each year or set up new folders.
10-Year Archive Makes IRS Audits A Breeze
After finishing taxes, staple all supporting documents by category and file them into a single folder in your archive, along with a copy of your actual tax forms. Label the ten folders in your archive as follows “Year 0”, “Year 1”, up to “Year 9”. File 2004 taxes in “Year 4”, 2005 in “Year 5”, and so on. Reuse each archive folder every ten years, automatically removing the documents left over from ten years past. The ten-year archive will guarantee that you always have a tax folder ready when you finish your taxes. You may use box-bottom folders if your tax files are too thick. If you prefer to keep your actual tax forms (1040, W2 etc) beyond ten years, you may set up ten additional folders, one for each tax decade, “Decade 00-09”, “Decade 10-19”, up to “Decade 90-99”. Before you empty out each tax archive folder, save just a single copy of your actual forms by transferring them into the folder for the appropriate decade. For example, when you go to file your 2020 taxes, your old W2, 1040, etc. from 2010 can be re-filed into “Decade 00-09”.
Permanent Records Don’t Need Purging
Save vital family and property records in a separate area of your filing cabinet. Consider using a fireproof file box or open a safe deposit box at the bank for critical items. Permanent family records include certificates, education and medical records, genealogy and memorabilia. Permanent property records include title, original purchase receipt, maintenance receipts, and warranties. As a general rule, permanent records for property include any papers relevant to the resale of the property. Property records are typically passed to a new owner when sold or may be filed with taxes after being used for calculating the net gain or loss of the sale. When an item breaks down or is damaged, the permanent file should be checked for warranty information, replacement costs, or to file an insurance claim.
“Remove/Replace” Files Are Easily Kept Current
Many ongoing household documents are periodically updated, renewed, or replaced. Keep a special area of your file drawer for only the most current versions of these documents. Whenever a new version arrives, automatically remove the old before filing the new. Examples include insurance policies, wills, leases, home loan/rental agreements, service provider contracts, employment benefits package, recent social security statement, or your current resume. In most cases, there is no need to keep older versions of these documents. Exceptions include keeping expired homeowner’s policies in your ten-year rotating archive to keep for additional time (for unnoticed damage e.g. rainwater leaks). If you refinance or sell your home, keep the prior mortgage agreement with your tax records for ten years. If there is an outstanding claim or dispute regarding any policy or contract, keep the documents with your active files until resolved. Afterwards you can file receipts showing compensation with your tax records. Repairs or treatments may be kept in a permanent file for the person or property concerned.
Taming Your Personal Resource Library
Before you decide to save articles, clippings, notes, brochures, and literature for future reference, consider that more current information is likely to be available at a later time on the Internet or by making a phone call. For example, rather than save travel brochures you can always browse online or call a travel agent to get the most up-to-date travel information when the time comes to plan your trip. If there is an article you wish to read, consider placing it with your action files instead of creating a file folder. If you don't end up reading it, chances are you never will and there will be plenty more current information on the same subject available to you at a later time. You may discard the unread article or you can always file it into a month folder just in case you decide to read it within the next two years. Recipes may be kept in a binder in the kitchen and magazines are best kept near the places where you enjoy reading.
Attention Advanced Filers! Partition Your Overcrowded Resource Files
You can keep as much literature as you want guilt-free using a simple technique called partitioning. When your resource files become overcrowded, simply move the folder (or folders) to the rear of your filing cabinet or to a second drawer. Start over with a new folder or set of folders with exactly the same names! For example, if you save travel brochures you will now have two folders each named “Travel”. Each time you create a partition, you can mark the year, for example, “2004” either directly onto each folder or by placing a divider in the middle of your filing drawer (if you cut a hanging file folder in half with scissors you end up with two home-made dividers). Alternatively you may take advantage of the “EVEN YEAR/ODD YEAR” method to rotate resource files along with your month and tax folders each year (simply keep a duplicate of each resource folder). Now here is the trick: if you ever look up a paper from an older file, put the paper back into the newer file with the same name toward the front of your filing cabinet (or in your current year’s file drawer).You can partition your files several times if you choose, moving older segments to the back or to a far drawer until you finally become comfortable just throwing away the oldest files. You can automatically reuse the old folders to begin a new partition. Using a limited number of partitions will provide you with a self-purging resource file system, and guarantees that your current, most recently accessed files are at your fingertips.
Set Up A Paper Processing Center
Make sure your workspace is set up as an effective paper processing center by keeping all of the essential paper-flow tools immediately on hand. Your checklist should include a trash (or shredder), a flat work surface, an action file system (for papers requiring action), and a maintenance-free reference file system (in a nearby filing drawer or rolling cart). Don’t forget to have the supplies on hand to finish the job now: a good pen, stamps, checkbook, address labels, etc. Other useful items include binders for projects, a nearby shelf, communications such as phone and Internet, and personal information management tools such as a calendar, to do list, address book, and a notes center.
Feeling Overwhelmed? Start With A Clean Slate!
Do you have boxes of papers from many years past? Do you have paper piles all over your desk? Rather than trying to conquer your legacy files it’s best to start fresh. Take a few moments to identify the critical papers requiring your attention and set those aside. Everything else you can put into boxes labeled by year. Once you get the hang of your new system, it will be much easier to transfer older files as needed or in small batches. After time has passed you can automatically discard any nonessential papers.
Save Time, Buy Printed Labels & Instructions!
Setting up a filing system on your own can be intimidating and overwhelming. FreedomFiler invented the self-purging filing system and offers its filing techniques free to the public for non-commercial use. Visit our showroom to purchase a home or business filing system, including designer labels and an illustrated instruction booklet. Filing systems offer printed titles for hanging files and folders, and plenty of blank color-coded labels to personalize your system. FreedomFiler's maintenance-free system frees you from the hassle of cleaning out and reorganizing your filing cabinet for the rest of your life.