I always feel like I need to save every receipt and piece of monetary paperwork. However, then I get behind on all of my filing! I have so many piles waiting to be added to the filing cabinet. So what exactly do you need to save? I have compiled some tips from a few sites to answer this question.
* Note: Be sure to shred or tear up any documents when you do get rid of them to avoid identity theft.
∞ Receipts: Save receipts for any items you plan to itemize on your taxes as well as items that you might need to return. I personally save all my receipts for the current year and the past year. I keep them by type and month in envelopes (monthly, irregular, grocery, and other bills). When I have accumulated two years of receipts, I purge the monthly and grocery receipts from the oldest year. I save any irregular receipts just in case I need to return or repair something at a later date. You might need those receipts also for proving purchases for warranties or upgrade options for getting reimbursed for lost luggage.
It is important to have some system to track your spending with your receipts and to reconcile your receipts with your bank statements and credit card statements. This will make budgeting, saving money, tax preparation, and meeting with a financial advisor much easier. See my post on “Make your checkbook digital!”
∞ Receipts, warranties and instruction booklets for major household appliances and electronics: Keep these until you no longer own an item. You only need to save the warranty information until the period it covers has passed.
∞ Bank records: You need to reconcile your monthly bank statements with your receipts and deposits. Save them until your taxes for that year are done and you have pulled out any statements you need to prove any deductions. Shred the rest.
∞ Pay stubs: You only need the current year’s stubs until you have reconciled them with your annual W-2 form.
∞ Credit-card bills: For the most part you don’t need to keep these after you have checked and paid them. It is a good idea to keep them for at least two statement periods to make sure you are not double-charged for something. However, save any that include items you will be using for tax deductions (i.e. charitable donations). Also keep any statements that have an item that is under warranty. Save the bill until your warranty expiration date. You may need it if your item needs a repair.
∞ Explanation of Benefits: If you are in the middle of a major medical issue, save them. Once your insurance has covered all the charges, there is no need to save them. However, you might want to save them until the end of the year to keep track of your deductible and to use for tax purposes.
∞ Insurance policies: Keep descriptions of your policies that you renew each year (home, apartment, car, etc.). Keep the paperwork until you get a new policy.
∞ Life-insurance policies: Hold onto permanent life insurance policy documents (from policies that have a cash value or investment component) in your safe-deposit box indefinitely. If you have a term life policy, hold the documents until the term is over, and then get rid of them.
∞ Loan documents: Save your closing documents, titles and registration information for your mortgage, vehicle, student loans, and other loans in your safe-deposit box. After your loan is paid off, you can get rid of them. Keep your vehicle and home maintenance and repair records in your home files.
∞ Investment statements: You really only need to keep your monthly and quarterly statements from brokerage, 401(k), IRA, Keogh and other investment accounts until the new statements arrive. Keep your annual statements as long as you own those investments (make sure the cost basis and holding period are noted on them). Then store them with that year’s tax records.
∞ Mutual and index fund prospectuses: You do not need to save these after you have looked at them.
∞ Savings bonds: Keep these in a safe-deposit box or other safe place until you cash them in. You can also convert them to electronic form using the Treasury’s SmartExchange program, at http://www.treasurydirect.gov.
∞ Tax documents: Save your federal and state returns and all the accompanying documents for seven years, in case you are audited. You can also save the pdf of your completed return if you did them on a software program. You may want to save the tax returns for longer than seven years by scanning them and saving them on CD or an external hard drive.
∞ Birth certificates, death certificates, marriage licenses, divorce decrees, Social Security cards, and military discharge papers: Save all of these in a safe-deposit box indefinitely. Other documents to hold on forever include: defined-benefit plan documents from current and former employers (pensions),
∞ Estate-planning documents: Wills, trusts, and powers of attorney are other documents to keep in your safe-deposit box indefinitely. Your lawyer and executor should also have copies. Your primary care doctor and anyone you grant authority to make decisions on your behalf should have copies of your health-care proxy.
∞ Safe-deposit box inventory: It is a good idea to keep a record of the location of the box and your keys. Also create a list of what you have in the box. Update the list once a year or as you add or remove documents. Keep photocopies at home of any documents you have stored in the box in case you need to refer to them.
– “Declutter Your Life: Which Receipts To Save From Your Filing Cabinet” from LearnVest.
– “Receipts: 5 Reasons to Save Them” from CESI Debt Solutions.
– “Conquer the paper piles: What documents to keep, what you can toss—and when” from Consumer Reports.