Properly managing your files ensures that you can find what you need when you need it. Good practice dictates that it should be organized similar to paper files.
Effective file management ensures that your files are organized and up to date. Whether its for personal or business reasons, having the right files ensures that you have any data that you need.
Organizing your files includes creating folders and organizing by file type. Depending on the files, it might be best to organize by year or by category. For instance, for taxes, it's best to organize by the year and from there, the type of document.