1. Get Organised

Get a small chest of drawers. Designate each drawer for a specific purpose - maybe classified as:

Savings bank account transactions, ATM and debit transaction slips and monthly statements.

Office

Payslips, medical bills and phone bills

Property payments: electricity bills, water bills, maintenance bills, property tax bills and receipts, and other taxes pertaining to your property

Credit cards

Monthly credit card bills, payment bills where your credit card is used and transaction slips.

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Communication

Phones and internet papers Household purchases: bills, warranty slips and Annual Maintenance Contracts (AMCs for ACs and computers...)

Investments

Original policy and investment documents, periodic investment statements and receipts

All you need to do is to literally throw whatever correspondence you have into each drawer. Do make sure to label your drawers, though. The truth is that most of the papers that we acquire are not really needed, unless you encounter a problem, such as overcharging on a credit card. You will then be in a position to retrieve them.

Warning: If there is something that needs to be dealt with urgently, leave it on top of the chest. Also, do keep the really important papers, such as birth and marriage certificates in a waterproof folder - leave a duplicate set with your parents or a friend.

2. Outsource Financial Management

Get a chartered accountant (CA) to file tax returns. Just empty that drawer marked "Office". Hand the whole thing over to the CA to sort through, along with your bank statement. He will also keep a track of your investments. You could also get a financial adviser. Most banks have advisers who will guide you on where to invest. They will do all the paperwork for you, so that you are not troubled.

Warning: Choose a CA with care, only through personal recommendations. Both CAs and financial advisers in banks have their own targets and incentives (a certain scheme may give the bank a higher incentive), so don't blindly invest in everything they say. Crosscheck with friends who are in the know.

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3. Make Monthly Investments

A large chunk of your money needs to be invested (40-50 percent, ideally). Instead of doing it on a yearly basis, when you get into a tizzy about investments at year-end, opt for a Systematic Investment Plan (SIP), which is an investment in mutual fund schemes. This ensures that you compulsorily invest a certain sum per year.

Preferably split into monthly payments, it is often easier on the pocket than a lakh of rupees at a time. Also, you can ask your bank to deduct the sum automatically from your account, through the Electronic Clearing System (ECS). In fact, making all your payments on a monthly basis reduces stress, as the amount going out of your account every month will stay more or less the same. This way, you don't have to keep a tab on how much is going out during which month.

Warning: If you spread investments over the year, you will also need to spread other expenditure over the year. So if you know you have to buy a certain number of Diwali or New Year gifts, or need to spend a large amount on a close relative's wedding, collect gifts through the year, and set aside monthly amounts for this purpose as well.

4. Go Easy on Life Insurance

Your financial plan must include a mixed bag of insurance and investment. Most people invest in life insurance by the time they are 30. Very simply, life insurance should take care of your daily needs, in case of a mishap, while investments must take care of possible bulk payments such as children's education or marriage. Make your savings plan based on this.

Warning:  Take your age into account - the lower the age, the greater the risks you can take. People in their early 30s can opt for a bulk of equity investments. Also, when investing in unit-linked plans (a combination of investment and insurance), take into account that a large chunk of the first year's sum paid by you goes into 'loading' - the charges levied by the organisation to combat their expenses, in terms of fund handling and other costs. Some companies charge even more than 60 percent. So get informed before you invest.

Also Read: Grow Your Own Money