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Spring Cleaning: Financial Documents To Keep Or Toss Thumbnail

Spring Cleaning: Financial Documents To Keep Or Toss

Keeping financial documents organized can be a challenge. Many people are reluctant to throw documents away in case they are needed later, which can result in piles of unnecessary paperwork. We’ve created a quick guide to help you determine what to keep (and for how long), what to toss, and how to securely store your most important documents. 

What To Keep Forever

Some documents, such as automobile records and health insurance documents, should be held onto forever, or at least as long as you own the asset or are covered under the policy. Other examples include:

  • Identity documents, such as birth certificates, Social Security cards, and passports
  • Legal documents, including marriage and death certificates
  • Documents relating to retirement plans, pension plans, and investment accounts
  • Beneficiary forms, wills, and other estate-planning documents
  • Mortgage records and other documents involving the purchase of your home

If you’re unsure whether a document should be kept indefinitely, it’s always best to err on the side of caution.

What To Keep For Seven Years

Tax documents should be kept for seven years in the event of an IRS audit. This includes:

  • Tax returns
  • Tax forms, such as W-2s and 1099s
  • Tax payment records
  • Receipts related to taxable assets, such as home renovations and repairs

What To Keep For One Year

Documents that may pertain to the current year’s taxes or ongoing financial transactions can be kept for one year, including:

  • Pay stubs
  • Credit card and bank statements
  • Receipts for large purchases
  • Medical bills

What To Toss, And How

Some documents can be discarded immediately, such as:

  • Receipts for everyday purchases
  • Monthly bills that have been paid

However, it's important to dispose of all financial documents safely. Any document that contains identifying information, such as full names, phone numbers, addresses, and account numbers, should be shredded prior to disposal. Shredders can be purchased for home use, and many local retail stores, such as Staples and the UPS Store, offer shredding services for a fee.

Storing Documents

Important paper documents should be stored in a secure, fireproof filing cabinet, home safe, or lockbox. Many electronic storage options are also available for those who wish to cut down on paper. Most banks and other financial institutions now offer electronic statement and filing options. Here at HFA, our MoneyCenter Client Vault provides unlimited secure document storage and serves as a safe place for all your important digital files.

While the prospect of organizing your financial documents can feel overwhelming, knowing what to keep and what to toss can help reduce unwanted paper and make it easier to find what you need when you need it. Please contact us with any questions about financial document storage.