Now that you have almost got to the end stage of the 31 Day Challenge to financial excellence and have hopefully made huge progress on various areas of your financial life, one of the worst things is to have your finances all in order and then not being able to find important financial documents when you need them, such as insurance policies, warranties, bank statements or income stubs for your tax return.
Having a proper, up-to-date and easy to understand filing system, does not only guarantee less stress and time lost when you are looking for things, it also ensures you do not waste money for example on a new product if your old one still has a guarantee on it. It allows you to quickly check you still have the right insurance, update your assets, debts and cash flow and makes is easy to check your credit card statements are all correct.Continue reading →
In the previous step we looked at how to organize your paperwork and file important documents to make sure you never have any financial document “misplaced” somewhere around the house when you need it. Of course in this day and age, having a physical filing system might not be your thing. Perhaps you prefer to have all your papers stored digitally.
There are a few advantages of digital filing:
it takes up less space in your house
a lot of your documents might already be digital (your utilities bills might already be sent to you by email instead of by post for example).
digital documents can be searched easier with tags or keywords
digital files don’t have the risk of fading or getting torn accidentally.
If you rather have everything in digital format instead of in variour folders in your home office, let’s look at how to set up a digital filing system quickly and efficiently.
How to digitize
You need to get all of your papers in digital format in some way and the easiest ways to do so include:
Opt to get as much as possible sent to you digitally: utilities bills, bank statements, insurance policies etc. Most companies and banks have an area in your personal area online (after you log in) where you can also find your last couple of statements.
Scan other documents such as receipts and payslips that you can’t get sent to you by email. This of course requires you to buy a scanner so you can scan these papers and send them to your computer.
take a photo of the document with your mobile phone (make sure it is of a good enough quality) and send it to your computer or filing app such as Evernote – there are some apps available that can do the work for you even better than your regular phone camera.
How to store your documents
Digitizing your documents is only step one: if you still don’t have a filing system in place to store your documents, but have them scattered all over the place on your computer or in your email, it is a little bit like having several big shoe boxes around the house with a collection of papers in them everywhere: you still won’t be able to find anything and you could have saved yourself the hassle of scanning all those papers. Here are some ways to set up a proper digital filing structure and save those documents in a logical way:
Use your email – some bills might already be sent into your email and if you use a scanner or the camera of your mobile phone, it is easy to forward these documents straight into your email. You can set up various folders and sub folders similar to what we discussed in the previous step on a physical filing system.
Use your local hard drive – create folders into which you download and save the documents.
Use an external hard drive – in addition to using your local harddrive on your computer make back ups on another external harddrive. If you don’t and your computer busts, you’ll be left with no filing system and documents. You can set up automatic backing up of your computer, for example once a month.
Use CDs, DVDs or a pendrive as long-term back ups in addition to the hard drive. You can decide to save your entire filing system easily in a few minutes. It’s a good idea to keep a copy elsewhere, away from your house, just to be safe. It can’t hurt to have your files stored away somewhere else in case anything ever happened.
Use the cloud – google docs or other online storing systems work well to make sure your information is safely stored and accessible from anywhere if you feel comfortable having your documents stored online.
Use a specific programme such as Evernote – this often lets you clip, store and attach photos to notes and documents, you can again set up a similar folder structure. Like google docs, an advantage of a programme like this is again that you can access it from anywhere.
Step 67 – Digitizing your Documents – in detail
First of, decide whether “going digital” is really your thing. If not, just stick with the physical filing system. You have to use what works for you, not what you think you should be using. If you go with a system that you don’t feel connected to, you’re just going to abandon it in a few weeks.
If you have decided that you definitely want to move away from a physical filing system, then let’s get started.
You’ll probably need a scanner of some sorts. There are great mini, portable scanners available or alternatively you might want to go for a standard desktop scanner.
Decide where your filing system will be stored: email, hard drive, Evernote, google docs etc. If you are already familiar with some of these programmes, it might be easier to also use them for your filing, but look around a little bit to make sure you find a system that works for you.
Before you start scanning your entire collection of papers, go through everything you have and throw away anything you no longer need. No point scanning those papers if they are redundant anyway.
Start little by little, commit to doing a section each weekend or to scan 10 documents a day.
As soon as you have scanned, make sure to file. Don’t just leave stuff on your computer or in your email un-processed, as it will all again pile up and become an unmanageable chaos.
Depending on the system you use you might be able to tag each file with keywords to make it easier to find them again at a later stage. This would especially be useful for receipts for example.
Make it a habit to scan new documents once a week and process them immediately. Consider using the same 5 basket system as mentioned in the previous step in which you sort your papers as soon as you come back home every day. The only difference is that your “file” basket would be used for papers that need scanning and filing instead of for papers that need to be put in a folder in your home office.
And that is all there is to creating a physical filing system my friends. Happy scanning!
We’ve already mentioned this quickly when talking about warranties, but one of the worst things is to have your finances all in order and then not being able to find important financial documents when you need them, such as insurance policies, warranties or bank statements or income stubs for your tax return. Come to think of it, is it even possible to become financially organized without having your home administration organized? Hmmm maybe not.
Having a proper, up-to-date and easy to understand filing system, doesn’t just guarantee less stress and time lost when you are looking for things. It also ensures you don’t waste money on a new product if your old one still had a guarantee on it, allows you to quickly check you still have the right insurance, stops you forgetting to pay outstanding bills and makes is easy to check your credit card statements are all correct.
In this step you are going to set up a home administration to make sure you’ll never end up in a situation where you can’t find your important financial statements. Continue reading →