In addition to the five default folders (Inbox, Junk, Drafts, Sent and Deleted), Windows Live Hotmail lets you create any number you want to further organize your email messages. To start the process, click on the Manage folders link in the folders panel and this opens the folder management section of Hotmail which lists the folders your currently have in your account.
You'll find three links at the top - New, Rename and Delete. Hit the "New" link and in the next page, enter the folder name and then click on the "Save" link. You shall now see the newly created Hotmail folder in the folder management section - refer images below.


Once created, the newly created folder appears in the list. There is a small checkbox in front of this new folder with which you select it. You can rename or delete this folder by clicking on this box and choosing the appropriate link from the top.

Please note: You can only rename and delete a folder you have created. The five default folders cannot be renamed or deleted as this would affect the functioning of your email account.
As mentioned above, folders are a great way of segregating and organizing your email messages. Hotmail provides 5GB of storage space and it's possible that over time, you would collect hundreds, if not thousands, of emails. Keeping all these messages in the main inbox will make it look really messy. The solution is to sort the emails into customized folders which you can create in your Hotmail account. For instance, you can put personal messages from friends and family in one folder separated from work-related emails that can be placed in another folder. However, how you use folders in your Hotmail account is up to you.
In Hotmail, you can move emails across folders in three ways:


Page contents: Quickly create folders in Hotmail to organize and sort email messages. Segregate emails automatically with the use of filters.
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