Retaining Personal Financial Records
The fall season is upon us! Now is an ideal time to do a paperwork purge. With tax season coming up, it’s time to declutter. You will, however, need to hang on to certain documents, especially as they pertain to your taxes. Create a system to keep and organize the important stuff, then you can get rid of the rest. Consider these practical tips to help simplify and get rid of your paper clutter. What You Should Keep and for How Long
Keep Forever. These are documents that would be difficult to replace if lost. • Income tax returns and payment checks • Important correspondence • Legal documents • Vital records (birth/death/marriage/divorce/adoption/etc.) • Retirement and pension records • Investment trade confirmations and statements that indicate buying and selling • Audit documents • Trust documents
Keep for a Limited Time • Mortgages/deeds/leases (keep six years beyond the agreement) • Car records (keep until you sell the car) • Credit card receipts (keep until you reconcile your credit card statement) • ATM and deposit slips (keep until you reconcile your bank statement) • Insurance policies (keep for life of policy) • Pay stubs (keep until reconciled with your W-2) • Property records/builder contracts/improvement receipts (keep until property sold) • Sales receipts (keep for life of warranty or life of the item on large purchases) • Warranties and instructions (keep for life of product) • Other bills (keep until the payment verified on the next bill)
Tips for Storage and Safety Now that you know what you’re keeping, decide where you want to keep it. Many people still keep paper files, but electronic records are becoming increasingly popular.
• Active vs. archive. Keep an active file you can easily access for documents you’ll need in the current year. Create an archive system for documents you need to keep for legal reasons, but don’t need to access on a regular basis. • Consider emergencies. This could include theft, fire, natural disaster, personal injury or even death. Consider keeping an “emergency kit” with your attorney or a trusted family member that contains copies of critical documents and records. • Storing information. Documents that are irreplaceable should be protected in a safe deposit box, a fireproof safe, or backed up electronically to your computer and/or an external hard drive that is encrypted. You can also utilize cloud services. • Buy a shredder. When you’re ready to purge documents, don’t let any legible information from your personal accounts end up in someone else’s hands. Shred it for peace of mind.