Organize your files.
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Financial expert David Bach helps you get your finances organized once and for all with an excerpt from his book Start Over, Finish Rich. Read more by downloading your free copy of Chapter 2.
Let's face it—organizing your finances can be a real chore. Every month, you get sent dozens of statements, bills, and other financial documents in the mail and online. It can be overwhelming. The good news is that there's a way to get organized that's amazingly easy and relatively painless—a system that allows you to find your bills and important documents quickly and without worry.

I first developed my file folder system back in the 1990s, and it's one of the top things my readers thank me for. That's probably because it is one of the few things you can do in less than an hour at home to fix and secure your financial life. Many people—maybe you're one of them—waste literally hundreds and sometimes thousands of dollars a year paying late fees, interest fees, and penalty fees because they can't find their bills in a pile of other financial "stuff" and, as a result, miss their payment deadlines.

Of course, times change and our needs change with them. So I have taken the Finish Rich File Folder system that I've described in my previous books and updated it for the current economic environment.

What hasn't changed is that it is still simple and you can still set it up at home in less than an hour. Here's what you do: First, get yourself 15 or so hanging folders and a box of at least 50 file folders to put inside them. Then label the hanging folders as follows:

The Finish Rich Tax File Folder System

1. "Tax Returns." This hanging folder should contain four file folders, one for each of the last three years plus one for the current year. Mark the year on each folder's tab and put into it all of that year's important tax documents, such as W-2 forms, 1099s, receipts to support deductions or credits, and (most important) a copy of all the tax returns you filed for that year. Generally speaking, you don't need to keep tax records for more than three years, although some documents—such as records relating to a home purchase or sale, stock transactions, retirement accounts, and business or rental property—should be kept longer. I keep all my tax documents for at least seven years, but that's an individual decision.

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