Updated Sep. 22, 2019. Originally published Jul. 2, 2013.
If you’re just stumbling across this, please click here for the other posts in the series.
This week we’re talking about bills and tax information. Now, we’re not talking about budgeting the funds for these; that should have been addressed last week. Rather, we’re talking about organizing the paperwork and the process.
As was the case with last week’s budgeting discussion, if you are not responsible for paying the bills and filing the taxes in your household, you can skip this week.
Bills
First, bills. You will need to ensure that you have a system for handling the bills, to be sure they get paid consistently and on time. And you’ll need a place to keep them until they’re paid so you won’t lose them before they’re due.
Most bills are monthly. Some may be bimonthly; a few are semi-annual. You may have the occasional bill that’s on some other, more unusual schedule. But the vast majority of bills can be addressed by dealing with the bills once a month. (Just make sure they’re assigned to the right month. If you handle bills once a month, on the 15th, but your water bill is due by the 8th, it will need to be tackled the month before.)
STEP 1: Decide how often you need to handle the bills, and on which day(s) you’re going to do it. Work these into your calendar or routine lists so you won’t forget!
Where/how you store your bills will depend a lot on your style. If you’re a “piler,” then hiding them away in a filing cabinet may not be practical. But it’s probably not helpful to toss them willy-nilly on your desk, either, or you’ll probably have trouble finding them when you need to pay them. (For “pilers,” literature files are a great help. They allow you to keep your piles, without having to open/close drawers or anything like that, but keep them neat and separate. Sometimes they’re called “mail sorters.” )
You will also need someplace to file the bills after they’re paid. And, of course, you’ll want to keep the paid and unpaid bills separate so you can easily see what’s yet unpaid.
STEP 2: Designate a place for the unpaid bills. Gather up any current bills and put them in this location.
Some people like to keep bill-paying supplies (pen, stamps, etc.) with their unpaid bills, too. This is up to you. We just keep our unpaid bills near a desk, and the desk already has similar supplies nearby.
STEP 3: Designate a place for the paid bills.
This will probably be in a file or files somewhere. Although you’ll want to keep all of your unpaid bills together, you will probably want to file them separately – water bills in a water company file, electric bills in an electric company file, etc.
STEP 4: Create a list of bills to pay.
Include due dates, account numbers, where these are sent, if they’re paid online (with username/password, if necessary) or via mail, etc. Any essential information needed to pay the bill should be included here. It will serve as a quick-reference for you, and enable someone else to pay the bills if necessary in an emergency. Put the list wherever you’re storing your other financial information. (Many people will keep this behind “finance” tabs in their home management binders. Another option would be attached to the inside of the “bills to pay” file folder.)
Taxes
With the bills in order, we’ll turn to tax information. What we’re looking to do here is simply to keep everything stored/recorded in an orderly manner so that when tax time rolls around, we don’t have to dig to find it. So pay stubs should be filed someplace consistent. Donation receipts (if you claim these on an itemized return) and similar records should all have a single place. Any receipts you’ll need to prove particular expenses or exemptions should be easily accessible. You get the idea.
STEP 5: Think about when you file your taxes. What paperwork/information do you typically have to locate? Make a list.
STEP 6: Consider what the best place is to keep each of these types of paperwork/information, and create a place for anything that doesn’t already have a place.
It may be that you just need a single file for “this year’s tax paperwork” but, depending on your needs and lifestyle, you may need a few. You might, for instance, have expense receipts in one file, pay stubs in another, and all other tax-related paperwork (like donation receipts) in a third. Remember, it’s whatever works for you!
Note that tax paperwork should be kept for 7 years after it’s used.
If you’re just stumbling across this, please click here for the other posts in the series.
Hey Rachel….the one I struggle with the most is “deciding when to pay the bills” I seem to just do it whenever- not consistently a certain date- will have to “schedule it on the calendar”. I seem to have the organization down….file folders in a bin w/ hanging folders- one for bills, insurance forms, tax forms, etc. there is also a place on a bookshelf designated for ail needing sorted and filed. (it took me years to get this streamlined. One thing I would add, is a list of bill paying info. I have a sheet of paper with each bill due and it’s log in/password info, due date, amount, etc there is a column for each month I can check off when paid…..it hit me one day that if I was sick, my husband needed to be able to know HOW to pay each bill.
Good point! I could sort out how to pay the bills if I needed to, because they’re all in one place, and I could check them for contact information, due dates, etc. But it would certainly be quicker to already have a list of these details!
I think Michael schedules to pay bills the weekend after each pay day. (Pay day is every two weeks, on a Thursday. So he’ll pay bills on Thursday or Friday evening, or Saturday. And he just knows to pay anything that is due before a few days after the NEXT pay day.)