Not sure what to file-and-save or what to toss when you’re staring at that stack of financial statements and receipts for last year?
As your financial files start to bulge, you might want to know what you need to actually keep and what can be shredded (yes, don’t just toss but shred everything that contains your financial info). Here’s what some advisors recommend:
Financial documents you should keep for the calendar year:
Going paperless yet? While you might find yourself getting more and more financial receipts and statements electronically, paper hasn’t gone away. Store financial records in these four categories for the entire calendar year:
- Bank statements
- Pay stubs (consider auto-pay direct to your bank account)
- Social Security benefits statements
- Investment/broker statements, including company 401(k) plans
Financial documents you should keep for 7 years:
Now you might be thinking …“why should I keep some docs seven years instead of, say, six or eight?” Simple answer: The Internal Revenue Service (IRS) can go back seven years to audit or look at personal income tax forms you’ve filed. You may need to prove a deduction for that time. Sooooo, for seven years, keep:
- Tax returns and supporting documents
- Bank statements and receipts needed to prove the deductions on those tax returns
Financial documents you should keep forever:
While seven years may seem like forever to you when filing something today, there really are some documents you do need to store forever. These would include:
- Employer-defined benefit plan communications
- IRA contributions
- Brokerage statements (document gains/losses until sale)
- Life insurance policies (most recent copy)
- Loan documents (until paid and you have title)
- Home improvement records/receipts (keep 7 years after you sell the property)
- Savings bonds (can convert paper bonds to electronic)
- Inventory of your safe deposit box
Financial documents you should keep until you’ve reconciled your statement:
The many grocery store, gas and coffee shop receipts pile up fast, so it’s good you can shred those after a relatively short time. You can typically destroy these after a month or so:
- Bank deposit slips
- Credit card receipts
- Monthly bills and credit card statements
- (But keep those needed to prove tax deductions longer, see above)
Looking for more on home organization? Check out Nicol’s 5 organization tools she can’t live without. You’re gonna love these. 😉
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