Monday, November 10, 2008

How to make and use a Finance Binder for your financial paperwork.

*** Edited 1/17/09 to add pictures. Thank you to Org Junkie for including me in her Link-Tastic Post!

It's been a few weeks since I posted any Home Manager or Homemaking ideas. With a new year right around the corner, it's a good time to share how I organize or manage our financial paperwork.

I use a shoe box.

Ha! Ha! Just kidding. That's my mom, I'm so NOT kidding. No, really I use a Finance Binder.

Why do I use a Finance Binder?

It makes my life easier! As our Home Manager it's important for me to keep our finances organized so we don't waste money because of misplaced receipts. Within 2 minutes I can have my hands on just about any receipt Joel needs from the current year. Several times I've had to go back a few years to find receipts for auto parts warranties. Saving us money once again.

A lot of people use a file cabinet and file folders but I find digging through a cabinet and folders to be chaotic and time consuming. A binder organizes my financial year in a way that makes sense to me. Whether you use folders or a binder the important thing is to have a system in place.

You can set up a Finance Binder also. You will need:

  • A sturdy 3 Inch Binder. I like the clear pocket binders so I can slide in a label for the year.
  • Tabbed Dividers. How many will depend on your number of categories.
  • A sturdy Closeable Pencil Bag for a binder. For small sized store receipts you need to keep.
  • 3 Hole Punch. It just makes life simple to have one for 8.5x11 paper!
How is my Finance Binder set up?

  1. Cloth zippered pencil bag. I place all small sized receipts I need to keep in the bag. Receipts for things like clothing, expensive toys, electronic items go in here. Receipts for weekly things like groceries or toiletry products are thrown away.
  2. Financial Goals with projected time to achieve them.
  3. Current Budget.
  4. Income Tab: Pay stubs, Stock Dividend receipts. Any taxable income receipt.
  5. Bank Statement Tab: Bank statements and any notices.
  6. Giving Tab: Receipts from charities we donate to. I keep ledger paper behind this tab with each tax deductible organization listed separately. Then as I donate I record the date, check # and amount. At tax time I just add up the columns. Makes claiming that deduction much easier!
  7. Utility Tab: Natural Gas, Electricity, Water/Sewer.
  8. Cox Cable and Telephone Tab: Our cable internet is reimbursed by Joel's employer each month so I keep the statements and reimbursement receipts.
  9. Medical Tab: Receipts for our medical expenses reimbursement account. If you don't have such an account medical expenses can be tax deductible.
  10. Auto Tab: Receipts from any work on our vehicles. Auto insurance statements.
  11. Tax Related Tab: Anything I think might be a tax deduction.
  12. Other Tab: Receipts for purchases that I might need later but are too large to fit in the Pencil Bag.
I have separate binders where I keep our mortgage statements (and home improvement receipts) and the statements for our retirement accounts.

There you have it. My system for organizing our financial paperwork.

How do you organize your family's financial paperwork? Do you stuff a shoe box under the bed? Use a filing cabinet? Or just throw it all away and hope for the best?


mer@lifeat7000feet said...

I have NO system, Stephanie, but reading this has me inspired.

I used to be very organized with our finances. Then John started doing freelance work and I couldn't handle the stress of paying bills when his income was so erratic, so I gave it back to him.

Let's just say that organization isn't his strong suit.

I'm sure he'd love it if I took things over again...I may have some questions for you in the upcoming weeks.

Stephanie @ My Answered Prayer said...

We use a binder to store the bills etc after we have paid them or gotten statements in but we have an excel spreadsheet with different tabls. The house pmt tab shows the amortization and how much goes to prin & int each month, we keep up with how much each bill is each month, how much we have in retirement and investments, a balance sheet, etc. My husband is a cpa so that is why that is so organized.

Amy said...

Great system! Finances NEED a system or they get out of hand so fast! If you have a system, at least if you get behind you have a way to catch up and sort through everything. Thanks for sharing!

Christie said...

This is one of my favorite things to do! Is that boring or what? :) I have three things: an inexpensive presentation binder, a basic spiral notebook, and a calendar. I bought an already assembled presentation binder (cost just about $3 in the office section at Wal-Mart). This is my new favorite thing to organize paperwork. I use one for work, too. It's the kind that already has the clear pages all in there in booklet form so I just slip in the bills and organize them by category. This is my favorite system I've ever had. It's really a neat little book and I like just flipping through rather than using the files, too. Most recent goes on the top and I keep 6-12 months of each category in the presentation binder before I file it away in a file. I still keep the amortization schedule in the back of the mortgage section even after I take out the previous 6-12 months because I like to look at it and get the big picture of where we are now. I keep a spreadsheet for the year that shows balances for accounts by the month tucked in so I can compare our balances over the last year. I am weird! I get all excited when the bills come in the mail because I love to organize them!!! I have a bill calendar for the year where I do a little chart in the open squares of the calendar grid so I can easily compare what we pay for utilities throughout the year...or car insurance, etc. I keep a single subject, basic (but pretty) :) spiral notebook where I do "financial forecasting"...basically where I write out what we plan to do financially over the next 4-6 weeks. I sometimes do different options and then get Todd's take on it because he tends to see things from a different angle and likes to look at the options. I like to get his insight on it. I am the details person in the fam, but he sometimes has a different way of looking at things that makes me say, "Ohhhhhh! I never thought of that!" :) He also tends to prefer the computerized version of any of this, but I love to see it on paper!!!! He has convinced me to go with the computer on part of my system in the past few years and I have to admit I'm glad I did. He's trying to convince me to put more on the computer...but so far I'm unconvinced!!! :)

Anonymous said...

we need a picture. ;o)

How does it work? Everytime I try to set up a binder things start falling out. Any ideas??


Anonymous said...

Wow. I LOVE the binder idea!! I'm totally going to do that. Thanks so much!

Anonymous said...

I hopped over here from OrgJunkie. I love your idea. How do you organize all your binders? Do you always use the same type of binder for a unified look?

Stephanie Kay said...

I'm honored that OrgJunkie linked to me!! This was a fun post to do. Mercy is right. It needs pictures. When I wrote the post I didn't have my new 2009 stuff yet. I do now and will try to edit this Sat. (1/17) with pictures.

I have a 3 hole punch that I use on everything that goes in the binder. Also, there are binders that you have to flip the top & bottom lever and then push on them a second time to open. That might keep things from falling out.

I like the 3 inch white binders with the clear plastic on the outside. I slide a piece of paper down the spine/side pocket with $ 2009 (or whatever the year is) written on it. This year I'll slide a paper with our goals into the front cover. I keep all the binders on one shelf. It's handy to know where they are if I need to a receipt from a previous year. I do have a fairly uniform look but that wasn't my goal. They are kept in my basement "office" so function was more important than form.

Thank you to everyone who has stopped by!

OH! I should also say that my momma informed me she no longer uses a shoe box. She now uses my binder system. What do you know, she's finally reading my blog! LOL!

Anonymous said...

Wonderful post. Always inspiring to see how other people do it! With being a newcomer to Dave Ramsey and his system, I think your binder system will be a wonderful addition! Thank you so much!

Danielle said...

We just bought a 6 year old home 11 months ago with the same trim (and other things) as it was built withso I was wondering why you keep your home improvement receipts with your mortgage statements. Is it for any sort of tax purposes or just becuase they both have to do with the house?

Stephanie Kay said...

Great question, Danielle!

We bought our house (built in 1947; we're the 2nd owners) 6 years ago.

I find it easier to track our mortgage by having all of that paperwork in a separate binder. I also put the homeowners insurance stuff in there. I only put major repairs or improvement receipts in that binder: the paperwork for the new furnace and AC we installed after we moved in, the assessment for connecting to the sewer and the receipt for the company who laid the pipe, receipt for the new chimney that was done after we moved in. That kind of stuff.

Mainly I do it so it's easier to find the information when I need it. I don't have to wonder what year we had the sewer done and then search in that binder. I know it's in the house binder if I ever need it. It will also be easier when we sell the house (hopefully this year) to be able to figure what we've actually spent on the house (other than dinky stuff like a new faucet or new door knobs).

I hope that answers your question.

Unknown said...

I really love this idea! I keep a yearly bill organizer that has a folder for each month. That works out fairly well, except it always seems to be bursting at the seams by the end of the year. I like the idea of using a 3-ring binder. Thanks for sharing!

Derik Tutt said...

I really enjoyed this post. I'm a "Safe Money" Financial Adviser here in Atlanta and you just gave me an awesome idea. I can pass these out as marketing tools and also give them to present clients. People really do need to get a firm hold of their finances. How can they do that if they don't have a clear picture of what their finances actually look like? This is a great system and I'm sure people will love to have this in their household. Thanks so much for sharing this with us.

Kiyon said...

I came over here from one of coupon sites and just read your finance binder post. Thank you for sharing this idea. I was in search of advice and ideas for how to keep track of expenses and this might be actually work for our family.
I just briefly checked your homepage and I will have check out your site and subscribe it. I'm also homeschooling mom of 3. (7,3, almost 1) and I like big family (so I would love to hear how you juggle your life as a mom of 4). I look forward to learn many tricks from your blog.

Kiyon said...

I have a question after watching some of filing method videos in Orjun blog. Looks like your binder is for each year for every category. Do you store anything per category for multiple years? I used to store each category papers in general filing cabinet but they can fill up the cabinet quickly over the years. In the event of emergency when you have to leave the house in a hurry, would you grab all your binders or just the current year's? I like the each year method but I also like to store each category in one binder so I can see them in a glance for past/current records. I'm trying to decide...
Thank you.

Stephanie Kay said...


I use one binder for each year. I've got about 10 of them now and need to start going through and getting rid of stuff more than 7 years old. (I think that's how long you need to keep tax stuff.)

I do keep 2 other binders separately. One is our house stuff - mortgage statements, insurance statements, receipts for major house work (new furnance/ AC, getting connected to the sewer, stuff like that). This isn't our 'forever' house so having all that info together will help us when we sell the house.

The other separate binder is our retirement accounts. My husband's employer has been bought out several times. Each new employer had a different 401k account so having a separate binder with just that information helps me keep up with all the different accounts and know how much money we have in them.

If the house was on fire, I'd grab this year's binder, the house binder and the retirement binder. I never even look in the other binders unless something comes up for our taxes. Or my hubby's trying to remember when he had work done on our van or truck. :)

I hope this helps!

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