1. Purge your 2012 files
Take a look at your file drawer. Can you easily slide files back and forth? Or is it so full that papers are bursting out of folders?
Critically evaluate what you are keeping in your paper files. Ask yourself these questions: Is this information available elsewhere? What’s the worst that could happen without this information? Is this something I need on a daily or weekly basis, or can it be archived? Once you get started, you will be amazed at how much you can discard.
2. Save what you need for taxes
If you itemize your taxes and claim deductions, you need to keep records of those expenses in the event you are ever audited. Pull them from your file drawer, label them “2012 Tax Back Up” and archive them in a secure location.
3. Go paperless
Reduce the paper in your files by converting to a paperless system. Ask for electronic billing statements and pay your monthly bills online. Buy a scanner and scan documents you need to save onto your computer. Use Evernote to capture bits of information like websites, products you want to buy, and photos. Evernote lets you organize them easily into electronic notebooks. Use Shoeboxed to digitize all your stray scraps of paper like receipts and business cards to an online file.
4. Back up your files
What happens if your computer crashes? In the worst case scenario, all your files, including your contacts, will be lost. To prevent a catastrophic loss of information, back up your files regularly. An external hard drive can be set to back up hourly or daily, or you can use a free cloud system like Carbonite or Mozy to save your files securely online.
5. Use personal finance software
In its simplest form, personal finance software is like a digitized checkbook. You can download your bank statements, credit card statements and investment accounts directly into the software. Once captured, you can categorize every item as broadly or as detailed as you like. For example, you could set up separate categories like Phone, Gas, Electric or you could categorize them together as Utilities. Once your expenses are entered and categorized you will know exactly where your money goes. It can be eye-opening! The Wall Street Journal ran an excellent article a few years back on how to choose and use financial software. More recently, PC magazine reviewed personal finance apps. Google “personal finance software” for more resources.