It’s the beginning of the year and therefore the beginning of tax season. If you’re like most Americans, preparing your taxes is one of the most dreaded tasks of the year. The most painful annoyance of it all is that mountain of papers on your desk, kitchen table, or bedroom corner that accumulated since the last tax event. Envision your home without that pile (or should I say piles!) and imagine if you could cut your tax preparation time in half with just a little work each week. It is possible! All you need is a filing system.
My number one suggestion to my clients craving a simpler and more peaceful life is developing a comprehensive filing system that suits their lifestyle needs. We are inundated with paper—bills, receipts, contracts, and policies—on a daily basis. It may be easy to add those papers to piles throughout your home. You may even believe your system is the piles—personal receipts in the bedroom, food receipts in the kitchen, and contracts and policies in the home office. In truth, this type of system is failing you; your productivity is weakened and your ability to find calm at home is diminished.
The very sight of a pile of paper, especially paper that you know must eventually be referenced when tax season rolls around, adds stress to your life. Seeing clutter literally adds clutter to your mind—clouding your thoughts and judgment—and the constant reminder of the dreaded task ahead can only add to your overall anxiety. When all your papers (those related to taxes and even those only needed periodically, like warranties, prescriptions, and insurance policies) are tucked away neatly, your eyes and therefore your mind can rest while at home. Remember, your home is your haven for rest and relaxation.
Once a filing system is in place, you’ll know what to do with your papers when they come in and won’t be tempted to set them on the growing pile to “deal with later.” Yes, this system must be maintained; it is not a love-and-leave-it one-time effort. A filing system is a living system that must be periodically reviewed to remove old paperwork such as expired auto and health insurance policies and credit card and bank statements from years ago. However, updating this system only takes a quick review at the start of each year. I like to check in with my system at the same time I start to prepare for taxes to accomplish the necessary tasks in one sustained effort.
To start a filing system, all you need is a filing cabinet, labels or a label maker, and hanging and manila folders. If implemented with your specific needs in mind and used consistently, a filing system is the best and most effective way to keep your house and mind clear of clutter, and while it can’t eliminate the annoyance of tax season, it can certainly leave you more time for the things you love.
- Sort papers. All your paperwork must be sorted into three piles: (1) toss/shred, (2) act, and (3) file. If you’re unsure what you can toss/shred, ask your accountant for guidance or refer to the IRS website. The “act” pile should be filled with papers that must be addressed immediately.
- Create file categories. Once you have your papers sorted, decide on categories for your files. Keep the categories broad, like “auto,” “health,” “taxes,” and “banking.” These high-level categories are your hanging-folder categories. Label and alphabetize the hanging folders. Now break down these categories further. For example, separate your “tax” folder by year and keep all receipts and paperwork for that year in a manila folder.
- Act. Place the papers in your “act” pile in a hanging folder labeled “Action Items.” Make a “to do” list to organize how and when to complete the necessary actions required by each task.