These days, almost everybody knows about and understands the need for keeping your personal information safe online. Strong passwords, regular review of banking, credit card, and other online financial accounts, care when using internet browsers or email, and other cyber-safety cautions are part of the day-to-day identity protection and financial security routine for most of us.
But that doesn’t mean that hard copy doesn’t matter anymore. In fact, there are certain paper documents that you should always keep organized and maintain securely: some for a year or two, some for longer, and some permanently. This time of year, when many of us are already thinking about spring cleaning in other areas of our lives, can be a good time to go through your financial records and make sure you’re keeping what’s important and getting rid of unnecessary clutter. Knowing what to file, what to keep, and what to dispose of securely is important, and this brief article can help you get organized and stay in control of your important documentation, both digital and hard-copy.
1. Keep for a year or two, then digitize or shred
Some documents have an earlier “expiration date” on their relevance, and keeping them beyond a year or so typically just serves to clog your storage space and make it harder for you to find things you really need (not to mention potentially exposing sensitive information to prying eyes). In this category, consider these:
- Bank statements
- Pay stubs
- Undisputed medical bills
- Credit card and utility bills
- Deposited checks
Especially for documents you can also access online, consider shredding these after 12 to 24 months. If something in this category doesn’t exist online, consider scanning and keeping the digital facsimile in a password-secured file on your computer, then shredding the paper original.
2. Keep for three to seven years
Documents in this category may need to be accessible a bit longer, but because they contain important personal records, you’ll still want to keep them in a secure location, organized by date.
- Income tax returns
- Tax-related documents, like canceled checks, receipts, W-2s, and 1099s
- Records related to selling a home
In some cases, the IRS recommends keeping tax returns and tax-related documents for longer than three years. On the other hand, if you can access these documents electronically, consider shredding your paper copies.
Note that most financial planners and many tax preparers offer password-protected digital vaults for client use. Such secured online locations can be a good place to keep important documentation for the prescribed period of time, alleviating the need for maintaining hard-copy files.
3. Keep during the term of your ownership
For documents in this category, you should retain possession for as long as you own the items in question. Doing so will facilitate later sales, warranty repair, and other transactions.
- Vehicle titles
- The title or deed to your home
- Documents related to mortgage or vehicle loans
- Home improvement receipts
- Rental agreements and leases
- Sales receipts and warranty information for major appliances
Once again, scanning the hard copies and keeping digital facsimiles in a secure digital file (except for vehicle titles, where the original document is required) can cut down on the amount of hard-copy filing space; the important thing is to know where these documents are located so you can access them when needed.
4. Keep permanently in a secured location
Documents in this category are typically concerned with proof of identity or citizenship, marital status, estate planning, or other important personal information. These original documents should be maintained securely, and for some, backup copies may be advisable.
- Birth certificate or adoption papers
- Social Security cards
- Valid passports and citizenship or residency papers
- Marriage licenses and divorce decrees
- Military records
- Wills, living wills, powers of attorney, and retirement and pension plans
- Death certificates of family members
- Vital health records (especially those that pre-date electronic health records)
While having digital scans as backups may be helpful in some cases, most situations that call for these documents will require providing the original document. Note that expired passports can also be valuable in some situations, so keeping them stored securely is advisable.
5. Shred immediately
And then there are some things you just don’t need to keep at all, including:
- ATM receipts
- Offers of credit or insurance
- Cleared checks (after 14 days, for those rare accounts that still get actual checks returned)
- Credit reports
- Prescription information for medicines you no longer take
- Expired warranties
- Expired credit cards, driver’s licenses, and other forms of identification
For things like these, immediate shredding is the best course of action. If you don’t have a shredder at home, check online for community “shred days.”
The US Federal Trade Commission maintains a consumer advice site with other helpful suggestions for protecting against identity theft and financial fraud. This can be a good resource for anyone who wants to stay organized and safe.
At Mathis Wealth Advisors, we want you to be well informed and organized in your financial life (and in everything else). If you have questions about any important financial matter, please let us help you find the answers you need.
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