How to Organize Important Documents

So where do you begin? First, you need to gather everything you have and sort it into a few different piles. Ask yourself, "Is this document important, moderately important or trash? While you're doing this, take a moment to really look at what you have. Obviously there will be things that are high priority, such as birth certificates and social security cards, but there will also be things you really don't need to keep. Be honest with yourself and toss or shred what you can.

Things that can be classified as very important should go into one pile. Birth or death certificates, social security cards, immunization records and passports are all things that are high priority, and these items should go under lock and key in a secure location [source: NOLO].

Moderately important things should go in the second pile. Tax records, W-2s, family photos, transcripts, school diplomas and investment statements are all important but may not need to be accessed regularly. These items can be placed in a file cabinet or file folder or perhaps on a digital storage device [source: IRS].

What about the trash pile? While this category seems self-explanatory, you may find it hard to determine what constitutes trash. In some cases, the fear of throwing out something that you may need will keep you hoarding unnecessary paperwork, but don't be afraid to toss it. It's the only way to minimize clutter and establish what's truly important.

Those ads that always accompany your bank statements are trash but what about the bank statements themselves -- should you throw them out or file them? Check out the next section to help you decide what you need to keep and what you can toss.

You don't need to keep everything forever. In fact, many of the documents you think you need to keep can make their way to the trash pile.

Here are a few guidelines that can help you decide what to keep and for how long:

Other documents such as W-2s and retirement savings plans should be kept until you actually retire [source: IRS].

Knowing what to keep and for how long is a good place to start on your road to organization. Now that you know what to keep you need to know where to keep it. Check out the next page for some innovative ways to store your important documents.

There are many methods for organizing your important documents. There's the low-tech approach, which utilizes file cabinets and file folders, and then there's the high-tech approach, which utilizes online or digital storage. You can use whichever method works best for you, including a combination of both low and high tech.

Documents like birth, death and marriage certificates and social security cards, immunization records and passports are all very important and should be kept in a secure location. A safe deposit box or home safe will do the trick. If you go with the home safe option, make sure your safe is waterproof and fireproof [source: NOLO]. It should also be fairly easy to move, so lock boxes can be a good alternative.

Digital and online storage options are convenient, easy to use and provide easy access to your documents. Digital storage of photos is an excellent way to keep your treasured family photos safe while providing you with an easy way to share them with friends and family. Web sites like flickr.com and photobucket.com are free and allow you to store your photos and decide who can view them.

Now that you know where you can store your important documents, another thing to consider is where not to store them. A big mistake some people make is carrying their important documents in a wallet or purse. This is a big no-no. Carrying a social security card or birth certificate around with you significantly increases the risk that it will be lost or stolen [source: Privacy Rights Clearinghouse].

Reduce your risk of identity theft and save yourself a lot of time and stress in the process -- get organized! For more information on organizing important documents, check out the links on the following page.