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Drowning in Paper


Drowning in Paper? What to Keep, What to Shred!

An important part of managing your personal finances is keeping your financial records organized. Whether it's a utility bill to show proof of residency or a Social Security card for wage reporting purposes, there may be times when you need a financial record or document.  However, people often keep unneeded documents far too long.  This can overwhelm you in paper! By taking the time to clear out and organize your financial records, you can eliminate a lot of waste and be able to find the things you actually need.

What should you keep?

One of the first steps in determining what records to keep is to ask yourself, "Why do I need to keep this?" Documents you should keep are likely to be those that are difficult to obtain, such as legal contracts, insurance claims, proof of identity, etc.

On the other hand, if you have documents and records that are easily duplicated elsewhere, such as online banking and credit-card statements, you probably do not need to keep paper copies of the same information.

How long should you keep your records?

Some financial records have specific timetables. For example, the IRS generally recommends that taxpayers keep federal tax returns and supporting documents for a minimum of three years up to seven years after the date of filing. (Certain circumstances may even warrant keeping your tax records indefinitely, so ask your tax preparer).

Listed below are some recommendations on how long to keep specific documents.

Records to keep for one year or less

  • Bank or credit union statements
  • Credit-card statements
  • Utility bills
  • Auto and homeowners Insurance policies

Records to keep for more than a year

  • Tax returns and supporting documentation
  • Mortgage contracts
  • Property appraisals
  • Annual retirement and investment statements
  • Receipts for major purchases and home improvements

Records to keep indefinitely

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

Keep in mind that the above recommendations are general guidelines, and your personal circumstances may warrant keeping these documents for shorter or longer periods of time.

Out with the old, in with the new

An easy way to prevent paperwork from piling up is to remember the phrase "out with the old, in with the new." For example, when you receive this year's auto insurance policy, discard the one from last year. When you receive your annual investment statement, discard the monthly or quarterly statements you've been keeping. In addition, review your files at least once a year to keep your filing system on the right track.

Where should you keep your records?

You could go the traditional route and use a simple set of labeled folders in a file drawer. More important documents should be kept in a fire-resistant file cabinet, safe, or safe-deposit box.

If space is tight and you need to reduce clutter, you might consider electronic storage for some of your financial records. You can save copies of online documents or scan documents and convert them to electronic form. You'll want to keep backup copies on a portable storage device or hard drive and make sure that your computer files are secure.

Or you could use a cloud storage service that encrypts your uploaded information and stores it remotely. If you use cloud storage, make sure to use a reliable company that has a good reputation and offers automatic backup and technical support. Our clients can use their portal to our Wealth Management System for this type of cloud storage.

Once you've found a place to keep your records, it may be helpful to organize and store them according to specific categories (e.g., banking, insurance, proof of identity), which will make it even easier to access what you might need.

How to dispose of old papers?

When you are ready to get rid of certain records and documents, don't just throw them in the garbage. To protect sensitive information, you should invest in a good quality shredder to destroy your documents, especially if they contain Social Security numbers, account numbers, or other personal information. Or bring them to our Client Shredding Event on April 22 from 9:00 am – 12:00 pm and we will shred them for you!