Develop a system for organizing your receipts.

I’ve already told you I hate receipts.  I do.  I hate them.  But they are a necessary evil.  So you just have to figure out the best way you can deal with them, and that way differs from person to person.  I can assure you that throwing them all in a box and ignoring them or storing them in your garage, attic, guest room, or storage unit is not a good plan.

I told you previously to gather all of your receipts in an envelope or in boxes if you have a lot of them.  Tomorrow, you will begin sorting through them.  So use today and figure out how you want to process your receipts and keep the ones that need to be filed.  I have had to change the plan multiple times over the past year because I found that the option I selected didn’t ultimately work for me.  Changing mid-stream is okay.  Just keep swimming.

What works for me?  Currently I handle my receipts in this fashion:

  1. We pay for nothing with cash.  Yes, I know that Dave Ramsey would disapprove.  But when we spend cash, we don’t keep track as well of our money, especially given that my husband frequently loses receipts.
  2. I put receipts in my wallet as soon as the cashier hands them to me.  I never have them put in the bag because I have found I am more likely to lose them if they are not put in my hand and placed immediately in my wallet.
  3. I clean my receipts out of my purse after my weekly shopping trip, and I put them in our receipts envelope.
  4. I (try to) obtain my husband’s receipts every day at dinner.  As I get them, I put them in our receipts envelope.
  5. On the second day of each month (or the second business day of the month if the first day of the month falls on a weekend or holiday), I download, save, and print the bank and credit card statements for the previous month.
  6. I verify each receipt in our receipts envelope with the statements, ensuring the amount is correct.
  7. I ensure that I have entered each payment in a budget app I have on my phone, classifying each by category.  I also have Quicken on my computer, but the app enables me to see while I am at the grocery store what my budget is for the rest of the year.  (My husband and I create yearly budgets in November rather than monthly ones.)  You may want to pay for an app (I did pay $2.99 for mine) or pay for a program to help you in this regard.  Or you could do what I did for years and use a spreadsheet.
  8. I put receipts for items under warranty in my safe.
  9. I put receipts for items I may need or want to return in my purse so that I have them when I need them.  (For example, I never discard a Lowe’s receipt until the project has been completed.  Otherwise, I may end up with ten light switches I have decided that I don’t like.  It has happened.)
  10. I file receipts for certain things such as home improvement expenses, moving expenses, educator expenses, work travel expenses, and other expenses that may be able to be deducted on our income tax return.
  11. I shred receipts that don’t need to be kept, for example, the tens of receipts my husband gives me for energy drinks he has spent cash on, and the receipts for my daughter’s books and clothes from the thrift store, the few items I spend cash on.  🙂

This plan may not work for me next year.  Let’s be honest:  It may not work next month.  But for now, it works.  And you have to find something that works for you.  You may still dread the process a little, but you shouldn’t hate it with every fiber of your being.

Some people aren’t good at handling these details for themselves.  (I love my husband, but he is one of these people, and to be candid, his lack of skills in this regard really harmed us financially a few years ago when I was busy running a business.)  You may need to seek a bookkeeper.  I hired a CPA to handle bookkeeping for a client several years ago, and although she charged him $150.00 per month for the service, she also told him when he was spending too much money or when she felt he could easily reduce an expense–and she also notified him on an occasion or two when she noticed expenses she thought were fraudulent.  She actually saved him money in the long run.

You may change your process next month.  So perhaps you shouldn’t spend money on an expensive program until you know you’ll stick with it.  My $2.99 app, obviously, was a different story.  (I will review the app later.)

DISCLAIMER:  We’ll start sorting through receipts to shred soon.  I will link you to A pack rat’s guide to shredding on the Federal Trade Commission’s (FTC) Consumer Information pages in the meantime.  I would also like to point out that I do not classify as receipts any of the following:  pay stubs, receipts for home improvements, bank statements, credit card statements, utilities bills, and particularly anything to do with any kind of taxes including canceled checks or receipts from federal, state, or local taxing authorities, even if these are receipts.  We will organize all of these later!   If you’re wondering whether you should shred something, call your attorney or accountant.  I am neither.

Time required:  I wish I could pinpoint it for you, but I’ve changed plans quite a bit this year.

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