Spring cleaning tips for your financial records

Woman dumping documents into shred bin
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Are old documents taking up too much space your home? Is your filing system overflowing with outdated papers? Do you have boxes full of yellowing financial records and you’re not sure what to keep?

 

As you clean out your home for spring, consider purging those old documents and records. While you don’t want to throw away anything important, there’s no point in hanging on to things that no longer serve a purpose in your life. Below is a simple guide to help you figure out what to keep, what to get rid of and how to safely dispose of your personal documents.

 

Things to keep forever

 

If you’ve ever lost your Social Security card, you know what a pain it can be to replace critical documents. There are some papers you need to keep for life—and it’s best to store them in a secure place like a fireproof lockbox or safe deposit box. These include:

 

  • Birth certificates
  • Death certificates
  • Social Security cards
  • Adoption papers
  • Divorce decrees
  • Life insurance policies
  • Wills
  • Health records
  • Records pertaining to a settled collection account

 

Things to keep for 7 years

 

Most financial experts recommend hanging onto financial documents for at least 7 years. If you get paperless bank statements, check with your financial institution to find out how long they keep your digital statements. Other docs that fall under this rule include:

 

  • Tax-related records, including:
    • Tax forms
    • W-2s
    • 1099s
    • Transaction records for taxable accounts
  • Documents related to insurance payouts

 

Things to keep while they’re active

 

Some documents only need to stick around for as long as they’re relevant to your situation. For example, you’ll want to keep employment-related records for as long as you’re at that job. You should also hold onto:

 

  • Home related documents as long as you live in the house, including:
    • Sales contracts
    • Deeds
    • Mortgage paperwork
    • Appraisals
    • Receipts for costly home improvements
  • Auto records as long as you own the car
  • Receipts for items with an active warranty
  • Receipts for expensive items (in case you need to make an insurance claim)
  • Insurance policies you’re still covered under
  • Job offers and performance evaluations for positions you still hold

 

Things to check and chuck

 

If you have a year’s worth of pay stubs taking up space in your home, the good news is you can get rid of them. Many of these monthly documents only need to stay in your hands long enough for you to check their accuracy. If you cancel a service, it’s wise to hang onto the final bill showing you’ve paid in full for at least a few years. Otherwise, you can toss the following:

 

  • Monthly bills, once you’ve confirmed their accuracy
  • Credit card statements, once you’ve checked for any false charges
  • Old pay stubs, once you’ve gotten your W-2 for the year and validated its accuracy

 

How to dispose of old documents

 

Once you’ve sorted out your throwaway pile, the last thing you want to do is dump it in the trash or recycle bin. Identity thieves can raid your trash and use your information against you. Any documents with sensitive or personal information on them should be shredded, burned or otherwise completely destroyed. Be thoughtful when you dispose of docs that include:

 

  • Account numbers
  • Birth dates
  • Passwords and PINs
  • Signatures
  • Social Security numbers
  • Names
  • Addresses
  • Phone numbers
  • E-mail addresses

 

Tips for staying organized

 

Once you’ve purged your old files, take a moment to enjoy the feeling—because it won’t last. It doesn’t take long before the papers start piling up again. You can manage the clutter by streamlining your filing system and sticking to a retention schedule.

 

Start by gathering all of your docs in one place. Set aside the items that need to be stored safely, and sort the rest into folders by type. Use a labeling system that makes sense to you so you can easily locate documents when you need them. For example, filing tax records according to year will allow you to see at a glance which ones can be tossed out. Designate a home for every type of document in your household, and file them as soon as possible after you receive them to prevent pileups.

 

Once you’ve got a filing system in place, commit to regularly weeding out old documents. You can even add a note to the folder to remind yourself when it’s time to purge again. That will help you save time on spring cleaning next year!