How to keep your financial records organized

Efficiently organize, retain and dispose of important documents with these personal financial record retention guidelines:

Organizing your financial life begins with getting your records in order. But managing the constant flow of new documents, while also retaining the old, can feel overwhelming. Left unattended, pay stubs, financial statements and tax forms can quickly pile up.

Thankfully, there are practices to help you manage these sensitive files efficiently and securely.

Working with us gives you accurate, complete and tax effective filing. Complete and safe document storage will help you simplify record keeping. Here’s how to keep your financial records organized — so you can feel more confident about your financial life.

1. Gather your records

The first step in learning how to keep your financial records organized is gathering all your financial documents in one place to account for the breadth of records you’ve generated in the past and how often you receive them. Locate paperwork stored in physical or digital files, email or paper inboxes or other areas.

Here are a few documents to look for:

Tax statements / returns
Retirement plan and investment statements
Mortgage and personal property records
Insurance policies
Bills
Receipts
Financial account statements
Checks
Pay stubs
Employee benefits
Estate planning documents

2. Audit and dispose of outdated paper documents

While there will be numerous records you’ll need to retain, there are also likely many you’ll be able to discard. Remember to shred any documents containing account numbers, birth dates, Social Security numbers or other potentially identifying information before you dispose of them. As you review your paper documents, remember that access to these documents online or by electronic delivery will probably not preserve them for a long enough period for use in an audit or other tax controversy..

Personal financial record retention guidelines:

3 years - either on paper or PDF:

Credit card receipts
Utility, cable and cell phone bills if you are self-employed and/or need them for tax purposes
Pay stubs
Investment account statements
Medical receipts
Monthly bank and credit card statements
Automobile records

7 years:

Tax returns
Supporting tax documentation, including W-2s, brokerage statements, tuition payments and charitable donation receipts

Forever:

Annual statements for 401(k), IRA, Roth IRA and other investment accounts
Mortgage records and other documents related to the purchase of your home (such as real estate commissions or legal fees)
Legal documents
Receipts for home improvements (until you sell the property)
Receipts for valuable personal property (to establish value in case of loss or damage)
Automobile records (until you no longer own the vehicle)
Estate planning documents

3. Decide where (and how) to store your records

It’s easy to misplace documents if they don’t have a designated home, which is especially important for records that you may need on short notice or in an emergency. Consider the best location for your files:

Physical records: While a folder or binder might be enough if you have just a few physical documents, you are more likely to need a file box, drawer or cabinet dedicated to your financial records. Consider a fire-resistant file cabinet or safe to store original, hard-to-replace physical records such as a will or power-of-attorney documents.
Electronic records: Storing records electronically is an option and may serve as a backup to paper records. There may be security issues with cloud storage. Banks and financial institutions offer clients access to records on their sites, which can be convenient but are never permanent unless downloaded. Access is also available for a limited period of time (such as 1 year) which is not sufficient time for an audit or the recommended time for them to be retained. You should have your own copies. Bank and credit card statements can be downloaded and saved digitally, while physical papers can be scanned and converted into electronic files. If you store your electronic records locally, remember to create backup files on a portable storage device.

Advice spotlight:

A bank safe deposit box may be use for storing important financial documents.

Usually helpful if the box will only be available during bank hours, and only people with an authorized signature on file can access it. A fireproof safe at home is a better option for physical items you need to keep secure but also accessible.

4. Create a filing system that works for you

There are many ways to organize files, but the most important factor is creating a system that makes sense to you — and to be consistent with file naming and location. For example, you could organize your system by type of financial document (i.e., estate and legal documents, bills, receipts, tax statements, payment stubs) or by broader life topics and events (i.e., car, house, work, wedding, insurance, etc.).

Whatever system you choose, consider organizing documents within each folder chronologically for easier access when you need them.

5. Make a list of accounts and passwords

In case you ever get locked out of your accounts or if a loved one needs access, create a list of all financial records and accounts, as well as instructions to access them, including usernames, passwords and PINs. Keep the list secure and updated, and share it only with those you trust, such as a spouse, partner or adult child.

6. Review and purge your records annually

At least once a year, review and discard old and unneeded documents — both physical and digital. For physical records, shred — don’t just recycle — documents, especially those that include any personal information such as account numbers, birth dates or Social Security numbers.

Manage your records effectively and safely

Organizing your financial records can give you clarity about your current financial situation, making it easier to reach your financial goals. If you have questions about your records you should contact us as we are always available to help and advise.