Anything the size of a fat quarter or larger gets folded and put in a bin sorted by color. Anything long enough to cut a strip 1 1/2 or 2" gets cut and put in boxes by width and lights and darks. Left over pieces are cut in what ever size squares I can cut. I use mostly 4 1/2. 4, 3 1/2 and 3 inches so that is what I cut the most of. I keep them in boxes sorted by size.I have a ton of color wash 2" and 11/4 inch squares from when I did a lot of colorwash quilts but I do not cut them that size anymore.
I use my scraps and they are much easier to use when they are all cut instead of having to go through the mess and press and cut what I wanted. I usually lost interest before I got started.