Now that we’ve thought through our needs, considered what we need to keep and what we can throw away and decided whether we’re going to keep paper records or scan them onto the computer, let’s walk through the steps of actually creating a file system that works.

1. Create a Basic Outline

Before we even touch our files, we need to start by creating a basic outline of what records we have and how we want them to be organized.

For example, I have Business Records, Household Records and I will soon have Homeschooling Records as well. Those three items will be the top levels of my outline, but I need to go to the next level and create nested categories as well:

I. Household Records

A. Tax Records
B. Vehicle Records
C. Insurance Documents
D. Medical Records

(This is one reason why it’s important to think through what you need to keep and how you want it organized before you get to this step, although you’ll probably tweak your outline as you go as well!)

2. Create Detailed Sub-Categories

Once you have your basic outline in place, it’s time to think through how you ideally want those records organized to make them easy to find and use. For example, under Medical Records, I want to separate each family member’s records so that I don’t have to sort through them to find what I’m looking for. I can then file new records in the front of the file so that they will be in date order (from newest to oldest) whenever I need them.

My outline now looks like this:

I. Household Records

A. Tax Records

1. 2009
2. 2008
3. 2007
4. 2006

B. Vehicle Records

1. Maintenance and warranties
2. Title, registration and tags

C. Insurance Documents

1. Car insurance
2. Canceled policies
3. Heath insurance
4. Home insurance
5. Life insurance

D. Medical Records

1. Baby Girl #1′s records
2. Baby Girl #2′s records
3. Baby Girl #3′s records
4. New Baby’s records
5. Mandi’s records
6. Sean’s records

3. Begin Creating Files for Each Category

Now, here’s where my file systems differ from a lot of other people’s. I never use file folders for my files. Never. Instead, I prefer to use hanging files for all of my files.

The reason I do this is simple: having the hanging file tabs all lined up and/or color-coded makes a file system much, much easier on your eyes and much, much easier to use. Regardless of whether I’m creating a file system for a homeschooling mom or a busy real estate team, I do everything in my power to break them from the habit of using file folders. I personally think they are a waste of money, space and resources.

Instead, I stagger and/or color-code the tabs to define the categories and subcategories, and then I alphabetize them within each category for quick reference.

For example, using my outline from above, I would start by creating tabs for all of the Tax Records and aligning them on the left of my hanging files. Rather than using one hanging file with four file folders inside of it, I prefer to create four separate hanging files labeled 2006, 2007,  2008 and 2009.

Next, I would move on to Vehicle Records. For this category, I would create two tabs: “Maintenance Records” and “Title, Registration and Tags” .  Instead of aligning these tabs on the far left of my hanging files, I’d start a few slots over so that they were staggered behind the others.

I always print a copy of my outline and keep it in the front of the file cabinet in a sheet protector, but if you’re worried about not having the master category defined for each grouping, you could simply add it to the tab. For example, “Yukon – Maintenance Records”, “Yukon – Title, Registration and Tags”.

4. Use Color Coding for Different Main Categories

I’ve also used colored tabs in addition to staggering the tabs to differentiate the categories. However, if you have several main categories – such as Household, Business and Homeschooling – that you want to keep in one cabinet, I would reserve your color coding for that purpose. You could buy the colored tabs or simply print your labels on colored paper in order to clearly see which section was devoted to which category.

5. File Your Papers

Once you have your files created, begin transferring your old files over to the new system and sorting unfiled papers. Chances are you will have to add sub-categories along the way, and you may look back and realize that you could have combined some of your sub-categories after all, but that’s okay. The key to a file system that works is being willing to tweak it as necessary. This is actually one reason that I’ve stopped printing my tabs and choose to handwrite them instead. I know that I’m more likely to create a new one when needed if I don’t have to print it!

How is this system the same or different from the one you already use? Do you currently use file folders?

Yes, it’s true – those are my household and business files above. The business files look neat, but I really need to tweak the categories now that we’re 14 months into it because it’s not as functional as it could be. The household files, on the other hand, desperately need to be cleaned out because they’re overflowing and a lot of what’s in them is probably unnecessary at this stage.