Think Outside the Shoebox When Organizing Financial Records


If you’ve ever had trouble finding an important financial document, you know why it’s necessary to keep your financial records organized. Less clutter means less stress, and though you’ll need to commit a bit of time up front to organize your files, you can save time and money over the long run when you can find what you need when you need it.

What records do you need to keep?

One key to organizing your financial records is to ask yourself, “Why do I need to keep this?” Documents that you should retain are likely to be those that are related to tax returns, legal contracts, insurance claims, and proof of identity. Documents that you can easily duplicate elsewhere are good candidates for the shredder.

Reasons to keep records

Along with tax purposes, you may need to keep records for insurance purposes or for getting a loan. Important records to keep are those that help to:

  • Identify sources of income
  • Keep track of expenses
  • Prepare tax returns
  • Keep track of the basis of property
  • Support items reported on tax returns

How long should I keep them?

You may want to keep records such as ATM receipts only temporarily, until you’ve reconciled them with your bank statement. However, if a document provides legal support and/or is hard to replace, you’ll want to keep it for a longer period.

Keep for a year or less:

  • Financial institution statements
  • Credit card statements
  • Utility bills
  • Annual insurance policy statements

Keep for more than a year:

  • Tax returns and supporting documentation — if you are audited, the IRS reserves the right to review tax returns filed during the “period of limitations,” which is generally the past three years from the date you filed your most recent returns
  • Mortgage contracts and supporting documents
  • Receipts for home improvements
  • Property appraisals
  • Annual retirement and investment statements, financial, brokerage accounts
  • Receipts for major purchases

Keep indefinitely:

  • Birth, death, and marriage certificates
  • Adoption papers
  • Citizenship papers
  • Military discharge papers
  • Social Security card

Where should you keep them?

Where you should keep your records and documents depends on how easily you want to be able to access them, how long you plan to keep them, and how many records you have.

A simple set of three-ring binders may be appropriate for some documents you wish to keep only temporarily, and to which you need to have immediate access. A lockable, fireproof safe may be more appropriate for more sensitive documents, which you still wish to have readily accessible. A Safety Deposit Box may be the best choice for those documents you plan to keep indefinitely, but to which you don’t need to have instant access.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

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