Financial documents—keep or toss?

Last week I taught a class on simplifying, and a common goal was clearing stacks of papers off the dining room table. Special angst was reserved for “financial documents,” which tend to stick around because they need review and/or filing. Or do they? It quickly became clear that none of us felt completely confident about what documents should be kept and which should be shredded.

Thanks to my friend Lisa for pointing out this short list from Real Simple magazine of what to save and for how long. I’ve added my own version below. 

1. Credit card and other billing statements—review for accuracy, pay, then shred unless you’re going to dispute a charge (if you’re making payments on a loan, you may want to keep the most recent statement as a record of your remaining balance)

2. Bank and investment account statementsreview for accuracy, then file the current statement and shred the previous one

3. Receipts

  • keep (short-term) if you think you might return an item
  • keep if you need the receipt for your itemized taxes
  • keep if you need to submit the original receipt for reimbursement purposes
  • keep if you want a record of a major purchase/payment, especially if there is a warranty period (for example, if you install a new furnace in your home, keep the receipt for your records and to pass on to the next owner if you sell the property)

4. Medical bills/statements—keep if you’re submitting an insurance claim or if you have an ongoing health issue (if you itemize your U.S. federal tax return, you can deduct eligible medical expenses if they exceed 10% of your income); EOB (explanation of benefits) statements—review and shred unless you’re going to dispute a charge

5. Pay stubs—review for accuracy, then shred

6. Insurance statement of coverage (for example, for car or renter’s insurance)—file the most recent version and recycle the previous one 

7. Check registers—recycle (do any banks still return canceled checks? shred them, then stop this service)

8. Prospectuses for investment funds—review and recycle (…or just recycle)

9. Property tax statements—file with your current year tax information; review and shred estimated property tax statements 

10. Taxes—keep your personal tax returns for the previous seven years

Tips

  • Get a filing system that works for you. I have a bankers box with hanging file folders that I keep in a locked storage closet down the hall from our condo—it’s not a convenient location, but I’d rather store up a few items to file than have to look at the box regularly, and in all other ways the box works for me. My husband likes to use an app to track receipts.
  • Clean out your files annually. At the start of the year I go through my files and pull out everything that isn’t needed anymore.
  • Get a paper shredder. If you have a lot of documents to shred at one time, bring them to a UPS, FedEx Office, Staples, or Office Depot/Office Max store for pay-by-the-pound shredding.
  • If you’re worried about fire damaging important documents, use a fire-safe file cabinet or put select documents in a bank safe deposit box (if you itemize your federal taxes you can deduct the annual fee). For a one-time fee, we filed original copies of our wills with our county probate court where the documents will be safe and available to our legal executors.
  • Sign up for electronic access to accounts and electronic bill pay and statements if you feel comfortable doing it that way.

Have I missed anything? Let me know if you’ve got a suggestion for keeping financial documents in check and off the dining room table.

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