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The Simple Envelope System for Keeping Financial Records

Photo by ollily

Don’t fret about not having the time to tediously enter all your financial transactions into a complicated spreadsheet or program. The envelope system for keeping financial records is low-maintenance, cost-effective, and easy to implement in little time. All you need are some envelopes, a rubber band, a pen, a sharpie, a highlighter, a storage box, an hour at the end of the month, and all of the month’s receipts.

The envelope system is a simple and fun way to save, organize, and store your receipts and keep reliable financial records.

Step 1: Save All Your Receipts During the Month

Throughout the month, get a receipt for each purchase you make. If a cashier doesn’t give you your receipt, don’t forget to ask. When making online purchases, make sure to print out the receipts immediately. If you can, print them out on thin paper and format them so they’re similar in shape and size to normal receipts.

Keep your receipts in your wallet until they start to overflow, then dump them into a designated envelope at home. Be sure to label the envelope something like “Current Receipts,” and keep it in a safe an easy-to-access location.

Step 2: Organize Your Receipts at the End of the Month

Before you can store your records in an orderly fashion, you need to organize the receipts. And before you can organize them, you need to finalize each receipt individually.

Go through each one and highlight:

  • The date
  • The total amount spent (or refunded)
  • The type of transaction (e.g. cash, debit, check, gift card)

Make sure to use a light-colored highlighter so that the ink from the receipt still shows through. Some receipts have very light ink that fades away once highlighted over. In that case simply highlight underneath the information in a straight line so that it doesn’t bleed into the information.

After highlighting, write down notes directly onto the receipts as needed:

  • Make note of tax deductible expenses which may be business related or for charity
  • Note returns, why they were made, how much money was refunded, and the new net totals
  • Label any receipts where it’s not immediately obvious where the purchase was made, to whom it was made, or why it was made
  • Write down any miscellaneous notes that will help you keep better records, possibly make future returns, budget in the future, and be a better consumer (e.g. noting how using a certain coupon saved you half-off, when a big sale occurred, etc.)

If you find that there’s not enough space on a particular receipt for taking these notes, then write them on a small piece of paper and staple it to the back of the corresponding receipt. Make sure to write a reminder on the receipt itself to reference the extra notes on the next page.

Here’s what a finalized receipt should look like (note that it’s staple to other receipts beneath it):

Once you’re done taking notes, organize the batch in chronological order and staple it. Alternatively, you can use a paper clip. It doesn’t matter if you use reverse chronological order instead (with the most recent receipts on the top) but whatever you choose — keep it consistent. Otherwise, you’ll have a hard time locating individual receipts later on when you have to switch between two different ordering systems.

Step 3: Store Your Receipts Using Envelopes and Boxes

Once you prepare the monthly batch of receipts, place it into an envelope. You may have to fold some receipts over so that the batch will fit. Consider color-coding an envelope for the season or month if that helps you stay organized.

Then fold the envelope closed (without sealing it) and flip it over. Use a black or dark-colored sharpie to label the envelope. Follow the example below, with the month and year in the upper left, or label in a way that’s easier for you to work with.

Once you have more than one month collected, stack the envelopes together in chronological order (keep it consistent with the order you have for the actual receipts). Put a rubber band around the bundle.

At the end of the year, you’ll have all your financial records bundled within twelve envelopes. Over multiple years, you’ll gather multiple bundles.

Keep your envelope bundles stored in a box. Keep the box someplace safe and easily accessible. Over time you may accumulate multiple boxes, which will be easy to stack and store. And any time you need to reference your financial records, they’ll be easy to find and access.

It’s ideal to use a visually appealing box that represents your financial goals. The box in the example below showcases comfortable chairs on a relaxing beach scene, as more vacation time is one measure of financial success.

With the easy-to-implement envelope system, you can keep all your financial records in one place with little hassle. And you can keep it fun by using colored pens, highlighters, and envelopes, and a visually appealing box that keeps you focused on financial success!

Melissa Karnaze is an experimental psychology masters student. She's interested in how we can use technology with greater mindfulness, writes about emotional productivity at Mindful Construct, and loves how the web is changing the world.

  • Published 08/3/10

Comments (9)

  1. BSR

    No offense, but this seems a very un-geeky way to file. For the past 4 years, I have thrown everything at a Fujitsu Scansnap scanner, and the amount of paper I keep (which used to overflow a 2-drawer lateral file-cabinet) is now just a few folders. Everything else is a PDF file in the computer.

    A logical naming and heirarchy of the files is necessary. I have folders set up for bills, purchases, the business I run, medical/dental, etc… A typical file name has the date, plus a few words about what the document is. Once the documents are scanned, named, and stored, they hit the shredder. At year-end, I roll a set of blank folders into a folder for the new year and start over.

    This is much more efficient for me, because when I need to find the receipt for the vacuum cleaner to take it in and get service, the file-name will have the word “vacuum” in it, so I don’t need to remember exactly when I bought it and what folder it’s in….I just run a quick search. I can print out a copy if necessary. I’ve noticed a lot of these newer receipts fade in a few months too, so getting them scanned in the first few days helps make sure I have a readable copy.

    Make sure you are backing up the documents in multiple places. Preferably your data is in two spots at home, and one in the cloud or at another site. I use Mozy, but Carbonite or even Dropbox could be used for this.

  2. Reg

    Dude, i’m pretty sure it was a joke.

  3. Jason

    I like this a lot. It’s beautiful in its simplicity and would be easy to follow through with for a long time. Some people don’t want to scan and itemize every receipt they get handed, and to me such an involved process wouldn’t be very sustainable, and therefore not very *productive*. Anyway, I think if it’s worth keeping, it’s worth having a hard copy of.

    Having a file system for financial records is geeky in itself, and doesn’t need to be tech-heavy to earn the distinction.

  4. Make this a virtual app!

    make a folder system to emulate this on the computer as BSR does premake the folders with month–year folder systems. Integrate the scanner to autodrop into the right folder when the program is running.

  5. ron

    Make an app for this pre-made file system with month-year folders.when the app is running the scanner would automatically load into proper folder.

  6. ano

    beats my system of tossing receipts into a bag, and then the bag into the garage when it is full. i cannot find anything so I don’t know why I bother.

  7. John

    I’ve been using a simpler version of the paper filing system for years. It works well and is simple to maintain. The main differences in the way we do it are: use manilla folders in the file cabinet (one for each month), record the expense in Quicken then toss the receipt into the manilla folder. At the end of the year, empty all the folders into a large mailing envelope, mark it with the year and file it away. When we need to find a receipt or info that was on it, we just search for it in Quicken. If we still need the receipt, its easy to find it since we know where and when it was purchased. (I do like BSR’s approach and might adapt his methods, especially for those cheap receipts that fade.)

  8. Steven D

    I’m old enough to have used all kinds of record keeping methods including Quickbooks and other great software. However, the method described is my favorite. Our accountant loves it and has no problem completing our taxes at a fair price.

  9. bloodysurgeon

    Hey, simple as it sounds, thanks a lot for this article Melissa. Hadn’t occurred to me to just use envelopes; I was sitting here thinking, hmm, how do I get a set of very small shoe boxes!

    I find it hilarious how some posts early on have been incredulous about people trying to file paper receipts ‘in this digital era’. The point is that some of us – for various reasons – wish to keep the paper copies somewhere. And much as I am a fan of digitising and scanning and storing my receipts, and organising them, its useful to have a technique to store a few – at least until returns are filed.

    Thanks again.

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