Organise your paperwork for the new tax year

Sorting out your home filing will not be the most exciting thing you do this week, but it's worth doing.

Okay, I know it’s dull. I know it’s time-consuming. I know it makes you want to weep sorry tears of frustration as you sit surrounded by payslips from 1999 while unable to find your most recent P60. 

But taking some time out of the long weekend to organise your paperwork ready for the new tax year will be time well spent. When your admin is in order, life is simpler and you can even save money. 

Serious savings 

Once you’re on top of your household paperwork, it’s easier to work out how much you spend on various household bills, meaning you’re better equipped to look for the best deals. 

It also makes you less likely to miss payments because you’ve mislaid or discarded a bill, potentially saving you cash in late fees and charges. So how do you go about setting up a system? 

Put a system in place 

Every household needs a system for its filing otherwise you end up with stacks of important papers and bills stuffed into drawers. 

There’s no single system that works for every household so it’s important to think about how your home’s finances work. Do you need a separate system for personal and joint filing? Do you prefer settling bills and checking statements once a month or are you happy to take care of them as soon as they land on your doorstep? 

The best advice I ever read for organising a home’s finances, purchases and filing - and I’m not proud of this - was from Anthea Turner’s book ‘How to be the perfect housewife’ (it was a wedding present, don’t ask). She said: “Run your home like a business.”  

If you were running a business then you’d keep your books in careful order, make sure bills were on time and keep track of exactly what money was coming in and going out. Organising yourself that way in the home will save you time, money and stress. 

One possible system 

If you have a different process for dealing with and filing your household documents then do share it with other readers in the comments below this article. 

But as an example, here’s one possible system that might work for you. You’ll need to have folders or filing boxes, as well as plastic pockets ready. 

Label each see-through envelope ‘energy bills’, ‘bank statements’, ‘home insurance’ and so on, until every aspect of your household’s finances is covered. Then put your existing bills into the appropriate file, preferably in chronological order. If you currently stuff all your household bills into a folder labelled ‘house’, this is going to make life far simpler. 

Next up, do the same for any personal documents, such as insurance policies, guarantees, and car paperwork. It’s also a good idea to set up a folder for any manuals you want to keep handy. 

When you add new documents to these folders in the future, make sure you discard any that you no longer need. Ongoing pruning will save you a time-consuming sort-out at a later date. 

A holding pen 

One of the main problems with any filing system isn’t storing the documents; it’s getting around to opening the letters and dealing with them in the first place. 

You don’t want to end up with random documents stuffed onto random bookshelves and into drawers. You need to set up a formal holding pen for the paperwork you haven’t yet dealt with. 

Make sure you open letters before they’re added to this waiting area, just to make sure there’s nothing urgent. That’s especially true if you don’t pay bills through direct debits and need to personally action them. 

Then sit down at least once a month and work through the documents, marking them ‘checked’ or ‘paid’ as appropriate. 

Don’t be too upset if you find you’re missing bills or statements as you set up your new system. The whole point of doing it is to get organised so that nothing goes missing in the future. 

Minimum effort definitely required 

Once you’ve set up a new system, you can’t rest on your laurels. You need to set regular time aside to keep on top of your paperwork, whether that’s weekly or monthly. 

The good news is that, once you’ve created order from the chaos, it shouldn’t take long to service the system. Once your system is up and running, it should really only take about half an hour a month to keep going. 

How long do I need to keep what? 

One big threat to an orderly household finance system is retaining unnecessary paperwork. And if you’re trying to organise your filing for the first time in years, you’re likely to have mountains of old statements, policies and payslips. 

But how long do you need to keep what? As a general rule, you want to keep hold of bills and bank statements for at least two years, while insurance documents are only really necessary as long as they’re valid. 

However, when it comes to anything to do with tax, HMRC asks that taxpayers retain their documents for at least 22 months from the end of the relevant tax year. So, don’t dispose of documents pertaining to the 2011-2012 tax year until at least 31st January 2014. 

Begin budgeting 

Once you’ve sorted out your household finances, why not keep on top of your personal finance goals by using a tool like lovemoney.com’s MoneyTrack? 

This allows you to see all your account details in one place, meaning you know how much money you have at any one time. 

Not only that, it allows you to set monthly targets and keep track of your progress, as well as analyse your spending patterns over longer periods. 

It also allows you to track your spending in various different categories, such as the gym, vehicle costs, socialising and household bills. 

Whether you’re trying to save money or just want to be clear where your money is being spent, this is a brilliant habit to get into for the new financial year. 

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