Set Up a Household Filing System

File It Right: Setting Up a Filing System

To set up your own household filing system according to the 1, 2, 3 plan, follow these three steps.

Step 1: Gather Paperwork and Records

To set up your filing system, scour the house and collect the family paperwork. Look for these types of documents and files:

• Automobile: Car titles, automobile insurance policies, car repair records, tire warranties, owners' manuals and car loan documents.
• Banking: Bank statements, cancelled checks, check registers, safe deposit box numbers and keys, money market accounts and certificates of deposit.
• Bills and loans: Credit card statements, receipts from utilities, cable and phone companies, bank debit cards, loan documents, furniture loans and department store accounts.
• Health and healthcare: Medical records, doctor and dentist information, prescription receipts, medical bills, health insurance policies, insurance handbooks and insurance cards.
• Housing: Mortgage statements or rent receipts, house title, property appraisals, floor plans, deeds, home inspections, land surveys, title insurance policies and property tax assessments.
• Insurance: Insurance policies, policy amendments and declarations sheets.
• Legal: Marriage certificates, birth certificates and adoption papers, estate files and wills, powers of attorney, medical powers of attorney (living wills), military service and discharge papers, passport and proofs of citizenship and Social Security cards.
• Retirement: Pension documents, Individual Retirement Accounts, Social Security information and annuities.
• Valuables: Appraisals, inventories and photographs of art, antiques, jewelry, rare books, silver, china or crystal.

As you set up folders and sort paperwork into them, set aside original documents that must be stored away from the home. Legal documents, birth and marriage certificates, titles to automobiles and deeds to real property, stocks and financial instruments all should be stored off-site, in a bank safe deposit box or in the case of wills, filed with the family attorney for safekeeping.

Don't forget to add photo negatives—or archived copies of digital photo files—to the safe deposit box. Memories are valuable, too!

Step 2: Give Each Record a Home

Good filing systems are like snowflakes: each family's system is unique. While prefab filing schemes (which often require filing documents according to numbers or numero-alphabetic codes) seem as though they might be easy to use, a filing system won't work for your family unless your family understands what's in it and where every record belongs. Make your filing system make sense—to you. Label file folders in everyday language, using terms that will help you remember what's inside each file folder. If more than one family member handles household paperwork, make sure everyone agrees on file headings. What's "bills" to one partner may be "payments" to another, so come to terms. Commonly used options for file labels include:

• Automobile: Label files for automotive records descriptively, such as Auto, Car or by car model.
• Banking: Use folder names like Bank, Checking, Savings or bank name.
• Bills and loans: File by name of payee, or by type of bill (Utilities, Telephone, Long Distance).
• Health and healthcare: Include files for Medical Bills, Insurance Records, Prescription Drugs and by family member's name (Michael—medical records).
• Housing: File labels can include House, Mortgage, Repairs or can be listed by address (3310 Threadneedle Road).
• Insurance: Set up files by insurer or by policy type: Homeowners, Life and Automobile.
• Legal: Sort family members' personal records in separate files (John, Mary, Alice), and set aside folders for specific legal issues (Grandma's Estate, 2004 Auto Accident)
• Retirement: Label file folders descriptively, such as Internal Revenue Service, Social Security, Pension.
• Valuables: Choose folder labels that make it easy to find information: Art, Books, Jewelry, Antiques.

As you set up folders and sort paperwork into them, set aside original documents that must be stored away from the home. Legal documents, birth and marriage certificates, titles to automobiles and deeds to real property, stocks and financial instruments all should be stored off-site, in a bank safe deposit box or in the case of wills, filed with the family attorney for safekeeping.

Don't forget to add photo negatives—or archived copies of digital photo files—to the safe deposit box. Memories are valuable, too!

Step 3: Create a Retention Schedule

Everyone has a friend or relative who will never part with paperwork—ever. Over the years, their household files become so bloated and cumbersome that it's impossible to find anything again.

Knowing what to keep and how long to keep it is the key to an efficient file system. Professional records managers call this list a retention schedule. Develop one for your organized home; it'll provide guidelines that will help you keep filing systems lean and mean. You'll need to check with legal and financial advisors for specific recommendations for your household. A simple list—tax records (keep 7 years); credit card receipts (4 years); house documents (forever)—makes it easy to prune stale files.