Here is a simple list of the important parts of organizing family papers (and other things too). This comes from Minnesota History Society. You can find the original info here.

Step One: Gather them together

• Bring together those items that you want to keep permanently. Keep them together in a box or a file, and clearly label them as family papers and mementos.

Step Two: Identify them

• Remember that this information is what will make the materials meaningful to younger family members and future generations.
• Fully identify writers and recipients of letters. Either write this information (inpencil) on each letter, or write a separate note to accompany a group of letters.
• Write onto the back of each photograph (in soft lead pencil) as much information as is known about it – who; where; date; event or other circumstance.
• Medals and other memorabilia: write a note identifying the recipient, occasion, and date, and keep it with the object.
• Write down other relevant information about the persons or events, particularly birth and death dates, parents’ and other family names, civilian or military service units or employment, dates and places of service, memorable experiences.

Step Three: Organize them

• The goal is to keep them from becoming scattered or mis-identified in the future, and to help others follow what was happening at the time.
• There are many options, depending on the number and types of documents. They may include: keep all of each person’s letters and other papers together; keep a single chronological run of all materials; keep one group of only letters, and another group of other materials; keep separate groups of each type of material.
• If photos or other items were received with a letter, keep them with that letter.

Step Four: Put them in protective enclosures

• The goals: protect them from wear and tear, from light and dust, from becoming scattered or lost, and from losing their identity.
• Use good-quality boxes, file folders, and other supplies. Archival-quality (acid-free) is ideal but not essential.
• Unfold folded items; remove letters from envelopes; place them in file folders.
• Remove pins, brads, and metal paper clips.
• Label each folder or other enclosure with an identification of its contents.
• Use separate folders or boxes for diaries and other volumes, or medals and other artifacts; do not put them in a folder together with letters or photographs.
• For some items – such as medals and other artifacts, groups of related photographs or post cards, books in poor condition – consider the use of specialty enclosures that are available from archival suppliers.

Step Five: Store them safely

• The entire group of materials should have its own “home,” whether in a box or a file drawer.
• Avoid extremes of temperature and humidity; keep them clean; protect them from mold and insects.