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How Long to Keep Financial Documents

financial documentsYes, this article will tell you how to reduce that giant stack of papers into a small, manageable, organized arrangement. This task isn’t difficult thanks to this article. This article is the culmination of the research I did when I was doing this exact same thing – sorting through stacks of boring financial documents. I just had my wisdom teeth out. I couldn’t do anything too strenuous for the rest of the day. So what did I do? I did what any personal finance nerd would do. I organized my filing cabinet.

I dug through Certificate of Deposit receipts, savings bond photocopies, taxes, W-2’s, W-9’s, R2D2…. tons of stuff. After doing this for more than five minutes I was happy to be on pain killers. The mental agony hurt worse than having my teeth pulled out.

What do I keep?

How long do I keep it?

I want to keep everything but then I could never search for and find anything.

So what I did was a lot of research. I then created a list of what documents to keep and for how long. After doing this, I had my filing cabinet cleaned within 1 hour. Pretty impressive. The following is what I created that day:

Documents to Keep Forever

  • Citizenship papers
  • Military records
  • Passport
  • Prenuptial agreements
  • Adoption papers
  • Copies of your IRA, 401(k), and other retirement account plans
  • Divorce papers
  • Alimony and child-custody agreements
  • Wills
  • Power of attorney

Documents to Keep for 7 Years

  • Income tax returns
  • Savings account records
  • Monthly statement information for a bank or brokerage account
  • Guarantees/warranties
  • Cancelled checks

Documents to Keep for 3 Years

  • Utility and telephone bills
  • Credit card statements if they list tax-deductible expenses or charitable gifts
  • ATM receipts/deposit slips
  • Medical bills

The Future of Financial Documents

Electronic copies hold up in court the same as paper copies. This means all of these documents can be uploaded to your computer and you don’t have to even own a filing cabinet. After I uploaded all of my documents (or just used the e-documents that most people give out nowadays) I actually got rid of my filing cabinet. Life is much easier this way. Physical documents are so dangerous. They have very little security. If they get misplaced, that’s too bad. If they burn in a fire, that’s also too bad. Trying to search for these documents is a pain. And whether you care or not, they kill a lot of pollution-eliminating trees.

I have all of my documents in the cloud (except for my passport). With virtually unlimited storage, I can keep all of my documents forever and do an easy search for them. I enjoy having as little paper in my life as possible. Today I like to use this guide as a quick reference for whether or not I should delete any files, should I run low on space.

What to Do with Unwanted Paper Financial Documents

There are 15 million victims of identity theft each year. With that said, it’s important to password protect electronic documents and shred physical documents. For passwords, make them extremely complicated. Think of them as pass phrases instead of passwords. For shredding paper documents, a shredder can be had for about $40 on Amazon. Or, to save time and money, take the papers into a local bank when they have a free shred day. It’s much easier than pushing paper through a little shredder for an hour a month. Some paper shredders are so slow!

Have you ever thrown away anything just to regret it later?

Money

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

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