One of the worst feelings is when you desperately need an important document and have absolutely no idea where it is. When it comes to keeping financial statements, consumers seem to be either one extreme or the other.
You have the individuals who keep every single document. Folders and folders are filled with statements, stubs, confirmation numbers and much more. Yet, if you were to ask them to pull a specific one from the pile they might look at you like you’re crazy. Searching through the financial clutter is like finding a needle in a haystack.
On the other side we have the tossers. Bank statements go in the garbage. Sales receipts are tossed in a drawer somewhere. Pay stubs. Well they have direct deposit. So who needs those, right? They eventually find themselves in a tight having to hunt down these important documents. Talk about a headache.
There are many reasons why you should keep track of important financial documents. For example, you might find yourself in a situation where you need to meet a financial advisor after your home has been flooded. According to the Consumer Reports National Research Center, only 40% of Americans think they can find a document at a moment’s notice. Knowing where your essential documents are could help handle the situation smoother and without a time delay. Good record keeping also makes it easier to pay bills on time, find receipts, and reduce anxiety when tax season comes around.
Here is a list of important financial documents and how long you should be keeping these records safe and available.
Important Financial Statements & How Long To Keep Them
If the sales receipts are needed for tax purposes, you want to make sure you keep them for at least 3 years. If the purchased item has a warranty, it is best to keep the receipt for the term of that warranty. You can also get rid of sales receipts once you are no longer able to return the item.
You want to keep for one month. Use ATM printouts to help balance your checkbook as well as reviewing your monthly payments and expenses. Once this is complete you can get rid of these documents.
Pay Stubs, Utility Bills, Cancelled Checks, Bank Statements, Quarterly Investment Statements
You want to make sure you keep these financial records organized and accessible for at least one year. Most of them will especially come in handy if you are planning to move, buy a home or make another major financial move such as switch utility providers, keeping past documents will be essential when browsing sites like Utility Bidder in order to find a cheaper utility option. If these documents are needed for tax season, it is best to keep them for at least 3 years.
Income Tax Returns
These are very important financial statements that you want to keep for 3 years. It is not uncommon for the IRS to double check the numbers you entered while filing your taxes. They can do so up to 3 years after you have filed your tax return. Having these documents will provide proof that everything is correct. You can check out this article to learn why you might be a suspect for an audit.
Other Financial Statements and Their Shelf-Life
Medical Bills, Cancelled Insurance Policies
Keep for three years.
Records of Selling a House or Stock
Keep for three years. You need documentation for Capital Gains Tax.
Deduction on your Tax Return
Keep 3 years from the date the return was filed or 2 years from the date the tax was paid.
Satisfied Loans Records
Keep for seven years.
Keep while still active:
? Insurance Documents
? Stock Certificates
? Property Records
? Stock Records
? Records of Pensions and Retirement Plans
? Property Tax Records Disputed Bills (Keep the bill until the dispute is resolved)
? Home Improvement Records (Hold for at least 3 years after the due date for the tax return that includes the income or loss on the asset when it’s sold)
Important Documents for Safekeeping
The following documents should always be kept in a very safe place. You should also communicate the location of these documents with your family in case of emergency.
? Marriage Licenses
? Birth Certificates
? Adoption Papers
? Death Certificates
? Records of Paid Mortgages
Financial documentation should not be taken lightly. Keeping track of your records will not only save you time and stress, but may also save you a few dollars down the road. Forgetting bill due dates is an easy mistake to make if you’re not in line with your financials. Remember to shred financial documents when they are no longer needed.
Financial Zombies have financial clutter! To learn more about financial zombies and if you’re part of the walking financial dead, check out this great resource: