The first thing you likely need when organizing your financial records is a filing system. Some people opt for separate areas for their financial statements and tax records and for bill paying, while others integrate all of these into one area. A file drawer in your desk or a filing cabinet, a file box, even a large, divided, expandable file folder will all work for sorting your financial materials. Many people choose to keep stamps, a pen, and other bill paying necessities at hand.

There are several popular systems for maintaining financial records. One involves designating monthly files. The month's folder would contain the stubs left from household bills and credit card statements, bank statements, and paycheck stubs. You can also choose to divide your files by subject, so all of your bank statements are filed in one folder, all of your utility bills in another at the end of each month, when bills are paid. Either of these systems is effective, efficient and organized, but you should choose the filing system that you are most likely to use on a regular basis. If you need to keep more significant records, for example those connected to a small business, it may be worthwhile to consider hiring a professional organizing service to assist you in setting up your file system, or take the time to review some of the many good books on organization on the market. If space is tight, moving past years' records into a file box for less accessible storage may be reasonable.

How long should you keep financial records? That answer varies, depending upon the record at hand. All tax related paperwork should be kept for 7 years. Annual statements on retirement accounts should be saved; however, monthly or quarterly statements can be shredded after they are reconciled with the annual statement. Important bank records relating to property or taxes should be kept; however, unimportant cancelled checks can be shredded. If credit card receipts or statements document tax related expenses, they should be kept 7 years. If they do not, they can be reconciled and shredded within a reasonable time frame. Paycheck stubs should be kept and reconciled with annual W-2 forms, then shredded. Statements regarding IRA contributions, brokerage statements and other significant financial records should be stored permanently, or until the account is closed.Most household bills can be disposed of when the check has cleared; however, do keep anything that might be relevant for insurance purposes. Records relating to the purchase of a home or condo should be kept permanently.

As you can see, you may need more filing space than you had expected. Setting up a filing system that you will use, and that works for you will save you time and trouble, particularly if you need access to your financial papers in the future. A small home shredder may be a good investment when getting organized to allow you to properly dispose of what you do not need to keep.