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I keep it very simple, I do a yearly hard copy photo album, not specific ones for events or children (I only have one child, though). In order to facilitate this, all the pictures taken in one year are in a digital file folder.

I think if I had two children, I'd want them each to have a copy of the yearly album, so I'd do it as a photobook so it can be reprinted instead of the current hard copy of photos and inserted into an album.

I went with flickr, which a friend suggested. I did 4 books her first year and now that she's 2, i'll work on a year 1 - year 2 book while i'm on maternity leave. I really like Blurb books.

I only take pics with my iPhone so I just backup my pictures onto my laptop periodically. It automatically date stamps the current date and I leave it as is. At the end of the year, I do a family photo yearbook via MyPublisher. For that, I just start back into the first folder of backed up pictures and go forward until I reach year end. At the end of the year, I move all those lil folders into a year folder labeled 201x.

Probably terrible organizing factor. I only have 1 kid though, but since the pictures are in chronological order, it works come yearbook making time.