My father in law has a really good system that works for him. He has a file cabinet that he has hanging file folders in, one per month. He puts all the paid bills, bank statements, etc from each month in their file.
At the end of the year, he goes through and throws out all of the bills except the last statement for each, but he keeps all the bank statements (they don't have little kids, but things like receipts for child care, mortgage, etc would be kept, too) and puts them in another file with the date for that year. He keeps 7 yrs worth. (Well, he actually keeps longer, but I believe that 7 yrs is as long as you need to keep them.)
This works for him. My dh does it different - he has a file for everything. LOL - I admit, while I'm pretty organized about most things, I HATE filing, so I leave that up to him. When he deploys, it usually just ends up in a big stack that I frantically file right before he's home lol!
at 12:33 AM on Feb. 1, 2010