Financial
Tips
USEFUL TIPS FROM THE PROFESSIONALS
Financial
Getting Rid of Financial Clutter
How Long Should You Keep Finance-Related Documents?
Many people struggle over which financial statements and records to keep—and for how long—and which ones to throw out. And what’s the best way to organize your files?
Think about why
Why are you holding on to various records? Some documents clearly have short-term value, while others have a long-term purpose. One way to put your financial files in order is to separate your short-term paperwork from your long-term items.
- Unpaid bills, paid bills, canceled checks, bank statements, credit card statements
- Receipts for major purchases, this year’s
income-tax receipts, including tax deductions
and charitable donations - Insurance policies: life, health, disability, home and auto
- Seven years of income-tax records, including backup information, such as W-2 forms and anything relating
to tax deductions - Seven years of bank statements, canceled checks and
check registers
- Credit card receipts: Toss them once you match them with your monthly statement unless you need to claim them as a business expense, or unless you need them for proof of purchase—such as for a major purchase
- Credit card statements: Throw them out once
your payment is posted unless you need them for
tax purposes - Pay stubs: Keep the latest couple in case you apply
for a mortgage; toss older ones - ATM receipts: Throw them out after reconciling them with your monthly bank statement.
- Utility receipts: Throw them out after your bill payment shows up on the next month’s statement, unless you need them to deduct a home-office expense
- Investment statements: Throw out monthly or
quarterly statements after you compare them with
a year-end report.
- Investments: Hold on to annual investment statements and records that show what you originally paid for stocks and mutual funds until you sell them and report tax gains and losses
- Home ownership: Keep home improvement receipts and mortgage bills as long as you own your home
- Receipts for major purchases
- Estate planning: A copy of your will, inheritance
papers, healthcare proxy forms, gift tax returns,
powers of attorney - Warranties and operating instructions for appliances
- IRA and 401(k) retirement statements
- Insurance policies
- Personal papers: Birth certificates, Social Security cards, legal papers about formerly owned properties
Think about why
- Keep all your financial files in one place
- Keep the most recent files accessible
- Back up your computer files; keep the backup data in a safe place; provide computer passwords with your other vital information
- Keep your system easy
- Each year, go through your short-term files and either throw out (recycle/shred) items or place them in your long-term file