How to Categorize Home File Folders

1). Assign one desk to serve as the center from which all your filing and organization is carried out. This space should have a stapler, plenty of drawer space and standard office supplies like a stapler, stamps, envelopes, labels, pens and different baskets or boxes. If you're able to, keep a computer, printer and scanner at your desk.
2). Organize your bills into two piles---unpaid and paid. Place them in boxes according to month, for example, have a little box for "Paid bills - October" and "Unpaid Bills - Due in November."

At any given time, you should only have 2 to 4 boxes. In mid-October, for example, you should have two boxes on your desk, one labeled "Paid - October" and one labeled "Unpaid - October." By Halloween, you might have four boxes on your desk, including the two October boxes and two more for bills due in November. By mid-November, all the October bills should be paid, so you should re-label and re-use your "Unpaid - October" box for a different purpose. Stash your "Paid-October" box in a closet.
3). Throw away unnecessary receipts and save the ones you do need, such as health expenses or purchases still under warranty, in little boxes or envelopes labeled by the month.

Do not label your boxes by category, such as health expenses or car expenses, for two reasons. The first, most people find that they end up having far too many categories and it becomes overwhelming. Labeling by month means you only have 12 boxes or envelopes to deal with. Second, many expenses do not neatly fit into one category. One single receipt from Target or Walmart can fit under household goods, health-related purchases or tax-deductible business expenses.

Receipts and other small scraps of paper can easily fall out of file folders, especially as the folders are being moved, which is why file folders are not recommended unless you staple the receipts to a sheet of paper and keeping these in the file folders. Otherwise, using a small boxes or an accordion-style file (which, like a box, is enclosed) will be easier and carries less risk of the receipts falling out.
4). Stack all the boxes in a master box labeled by the year. Do this every first week of January. This way you will have organized files of all your documents from the previous year, labeled month by month.

Keep the master boxes at least 3 to 5 years, especially if you own things that are under warranty (most warranties expire after 1 to 5 years) or if you've claimed tax-related deductions.
5). Photocopy important documents like deeds, tax returns, medical bills, insurance claims, car titles, stock certificates and other essential paperwork. Put the photocopies in file folders organized by type (home, car, health) and store the originals in a fire-proof safe.
6). Keep a shredder or recycling bin near your desk so you can get rid of unnecessary paperwork.