Ever lost an important document, or had a hard time finding documents in the mix of other papers? Unfortunately, if we don’t take the time to stay organized, we almost always end up wasting time and piling on stress later as we have to search for the things we need. And when it comes to tax and financial documents, this becomes all the more true! Broadridge Investor Communication Solutions gives great tips on how to organize financial records and save time and money in the long run.
What records do I need to keep?
Are your files overflowing with nonessential documents? Instead of keeping paperwork because you “might need it someday,” try asking “Why do I need to keep this?” instead. Documents you most likely need to keep include tax returns, legal contracts, insurance claims, proof of identity, and other related documents. Documents that you can easily duplicate, however, can usually be eliminated (i.e., if you bank online and can view or print copies of your monthly statements and cleared checks, you may not need paper copies of the same information).
How long should I keep them?
A good rule of thumb is to keep financial records only as long as necessary. For example, you may want to keep ATM receipts only temporarily, until you’ve reconciled them with your bank statement, but a legal document and supporting docs (and/or other hard-to-replace information) should be kept for a longer period or even indefinitely.
Records that you may want to keep for a year or less include:
- Bank or credit union statements
- Credit card statements
- Utility bills
- Annual insurance policies
Records that you may want to keep for more than a year include:
- Tax returns and supporting documentation
- Mortgage contracts and supporting documents
- Receipts for home improvements
- Property appraisals
- Annual retirement and investment statements
- Receipts for major purchases
Records that you may want to keep indefinitely include:
- Birth, death, and marriage certificates
- Adoption papers
- Citizenship papers
- Military discharge papers
- Social Security card
Remember, these are just general guidelines to help you get started. If you have a good reason for keeping some records for a shorter or longer period of time, next post we will discuss organizing financial records so you can easily find what you need when you need it.
