How to Organize Your Financial Documents

Now that tax season is long gone and my pile of papers is growing again, it’s time to find a better way to organize my financial documents. Learning what to keep and what to throw away (or shred) seems to be a great first step.

After scouring the Internet, I have put together a handy diagram. It helps you decide what documents to keep and for how long. Keep in mind that not every document in the known universe is mentioned, so be sure to use your best judgment.

Keep Forever

These are the documents that are irreplaceable and would be devastating to lose:

  • Deeds, Mortgages, and Bills of Sale
  • Year-End Statements for Investments
  • Legal Documents and IDs
  • Home Improvement Documentation
  • Major Purchase Receipts (warranty/insurance)
  • Automobile Titles
  • Medical Records
  • Education Records
  • Pension Records
  • Business License

Keep for Now

If you have something with an expiration date, it’s best to keep these documents around for the time being:

  • Contracts
  • Insurance Documents
  • Stock Certificates
  • Property Tax Records
  • Disputed Bills
  • Warranties
  • Coupons
  • Retirement Plan Statements (401k, 529, IRA, etc.)

Keep for 3 Years*

It’s extremely important to keep records to prove you were telling the truth on your tax returns. Be sure to note two major exceptions below:

  • Bank Statements
  • Credit Card Statements
  • W-2 and 1099 Forms
  • Receipts
  • Canceled Checks
  • Disability Records
  • Unemployment Income Stubs
  • Medical Bills/Claims
  • Records of Satisfied Loans
  • Annual Tax Returns

*6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.

*7 years if you file a claim for a loss from worthless securities or bad debt deduction.

Keep Until Annual Statement Arrives

We get a lot of information on a monthly basis. If some form of annual statement arrives summarizing all the monthly information, these documents don’t need to be around forever (unless the earlier situations are true):

  • Paycheck Stubs
  • Monthly Mortgage Statements
  • Monthly/Quarterly Investment Statements

Keep Until Monthly Statement Arrives

Unless you need to keep some of these for taxes, they can be thrown away or shredded once they are compared with your monthly statement:

  • Receipts
  • ATM and Bank Deposit Slips