It's Spring -- Do You Know Where All of Your Documents Are?

It's time to weed out your financial papers.

As the weather warms and you gear up for a big spring cleaning, it's also an excellent time to organize your financial papers. This is an important step toward getting your finances in shape.

Creating a filing system that works best for you is essential, but many people proceed directly to creating a paper-shuffling systems of loose papers and folders and forget other details that doom their organizing system.

So while you are cleaning and organizing the rest of the house, here's how to rethink how you store your financial papers and create a better system:

Determine a Central Location

Most people keep their important papers in the wrong place. They choose an out-of-the-way spot such as the basement, the back of a closet or a spare storage room instead of an area that is centrally located and easy to access.

If you fail to pick a place that makes it easy to immediately file away the papers, the papers will end up on desks, in drawers and spread among various boxes all over the house.

There is an easy way to determine if your current filing system is adequate. If you know exactly where all your tax information, credit-card statements, household bills, banking statements, appliance warranties and manuals, passports, investment papers, wills and insurance papers are without searching and they are easily accessible, then you have a good system.

If you are like most people and don't know instantly where all these documents are, then it's time to determine an easily accessible place for all of them.

Disorganization will not only cost you valuable time when you need to locate your important papers, it can also cost you money.

While individuals who are young and single can probably get away with a large folder to keep track of their financial papers, if you are married or have any type of investments, you really need to purchase or create a filing cabinet dedicated to them.

Where you place it depends on where you open your mail and take care of the bills. Placing it in a home office or next to a family room desk where you open mail makes it easy to access and file everything immediately so it doesn't get lost or misplaced. Some people even use a kitchen cabinet. The most important thing is that it's where you have easy access and a place that you use regularly.

Create a Master Document

Once you have established a place to store all these financial documents, then create a master document.

While you won't be able to create this master document until you have gathered all your other financial information and determined a filing system, it's important to mention it here because most people never create one.

Once all their financial papers are gathered together, they feel that is enough and they are finished -- which can be a huge mistake.