Take charge of the paper pile: What financial records to keep and what to shred


Shannah Compton Game

Shannah Compton Game

Blog author Shannah Compton Game

Shannah is a Certified Financial Planner Professional who is a millennial money financial strategist. You can find her online at http://www.yourmillennialmoney.com, listen to her podcast Millennial Money on iTunes and follow her on Twitter at shannahgame.

Published February 4, 2016 | 5 min read

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Featured Image Take charge of the paper pile: What financial records to keep and what to shred

Going paperless. It's been all the rage for years now. It was supposed to be the answer to all those mountains of paperwork that seem to be lingering around your house. We were all going to be super organized and waste free.Unfortunately, as we ventured into the "paperless" realm, what we didn't expect was that the actual piles of paperwork would be replaced by even more digital piles of paperwork that would fill up our inboxes and computer memory.

When it comes to financial paperwork, figuring out what to keep and what to toss can seem like a scary proposition. How do you know which documents are important and which ones are just taking up space? Hence, why you probably still have all that paperwork.You can finally relax. We've got a handy list of what financial paperwork you need to keep, and what you can toss to enjoy the perks of going paperless.

The financial records you can shred

ATM receipts - Save them until the end of the month and once you've reconciled these with your monthly bank statements, you can toss these puppies away.Loan docs that have been paid off - If you've paid off a loan, there's no need to keep all the loan document paperwork. All you need to save is the proof that the loan has been paid off.Credit card bills - After you've reconciled these bills at the end of the month and confirmed all the transactions are correct, go ahead and ditch these as well. Most credit card companies will send end of the year summaries which will tally all your expenses in nice and neat little categories, which makes it super easy come tax time if you need to deduct expenses.

Certain receipts - Keep your receipts for one month until your monthly bank statement and credit card statement has been reconciled. If you don't need the receipt for a return or warranty, go ahead and toss it. However, if you write off business expenses, you will want to hang onto that receipt. Keep it in a storage container, scan it on your computer, or use a service like Shoeboxed or Evernote to organized and categorize all your loose receipts.

-> Learn how to turn Evernote into a virtual tax paperwork filing cabinet

401(k), brokerage, IRA, etc. - The good news is that you don't need to keep all those pesky monthly and quarterly statements. You, of course, will want to look over them when they arrive to make sure all is on the up and up, but the only statements you need to save are the annual statements. Keep those annual statements for the length of your retirement plan, or until you sell the investments.Insurance policies that you no longer have - If you've replaced your health or life insurance policies recently, there is no need to hang onto the old policies or summary booklets. Be certain to make sure if your social security number is on any of these documents that you properly shred them rather than just tossing them in the trash.Utility & cell phone bills - For some reason we all think that we must hang onto these bills but have no fear, this endless stack of paperwork can be trashed once you've paid the bill or the transaction has been reconciled. There's one caveat of course: if you need your cell phone bill for business deduction purposes, be sure to keep an extra folder on your computer where you save these for proof of the expense.

The financial records to keep (at least for a while)

Tax records - Did you know that the IRS can audit you up to three years after you've filed your tax return? Since this is a reality, it's super important to keep your tax records for at least seven years in case you are audited. You don't need to keep paper copies; digital records will work as well, however, make sure your tax returns and supporting documents are password protected for your safety. There's a ton of information on those returns that would be an identity theft nightmare. After seven years, feel free to toss everything, unless you want to hold on to your tax return to chart your income over the years.Car documents - While you don't need to keep your monthly statements as you're paying off your car, it's vital that you keep any title and registration information in a secure place until you sell the car.Life insurance - When you purchase a life insurance policy you will receive a copy of the entire policy to prove that you are insured. A life insurance policy is not the type of paperwork that you should just throw in a drawer. Rather, keep it some place safe like a safety deposit box or a fireproof and waterproof safe. It's also not a bad idea to let the beneficiary know about it (if you haven't already) and give him or her a copy.

-> Here are 3 foolproof ways to keep a life insurance policy safe

Loan docs - If you own a home or a boat or just have student loans you are paying off, be sure to keep the documents about these loans in a safe place like a safety deposit box. Once you've paid off the loan, you can trash these documents, but not a moment before.Pay stubs - Keep all of your stubs up until the time you file your tax return. The best way to keep track of these is to make a dedicated tax folder either on your computer or in your house and slip the pay stubs in for safekeeping as soon as you get them. Once you've filed your return, you can toss these and get ready to start again for the new year.

Photo: James West