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Financial documents: What to keep and when to toss.

If it feels like you are drowning in receipts, statements, bills and other paperwork, you’re not alone. Keeping track of it all can be challenging. But you can get your head above water and gain peace of mind knowing which financial documents to keep, and more:

  • Know how long to keep them.
  • Know how to store them securely.
  • Know how to dispose of them safely.

Things to keep for one year or less:

For daily and monthly purchases and account activity, save things like receipts and pay stubs until you can reconcile them with detailed financial records, like your credit card statement or taxes.

  • ATM receipts and bank deposit slips: Make sure they match your monthly statement or online account information before tossing them.
  • Receipts for everyday purchases: Discard once the purchase appears on your bank or credit card statement and you’re sure you won’t need to return the item.
  • Bank statements: Plan to keep these for one year. However, if a statement reflects a tax-related expense, hold on to it until tax time (see below). Then, save annual statements for seven years.
  • Pay stubs: Save until you reconcile them with your W-2 form (or 1099 if you’re self-employed). Consider keeping a few months of recent pay stubs on hand if you expect to apply for a large loan, such as a mortgage.
  • Utility bills: Discard once you receive the next bill showing the prior bill has been paid. Keep for longer only if you need the bill as a record of business deductions for tax purposes.
  • Monthly/quarterly statements: At the end of the calendar year, you can discard monthly and quarterly statements — such as for your mortgage, credit card or investment accounts — after verifying the information against year-end summaries.

Things to keep for longer than a year:

For more significant, long-term purchases, you may need to file away documents for several years. Information relating to insurance, medical care, investments and retirement should also be saved for a longer period of time.

  • Tax returns: Keep tax returns from at least the past three years, preferably seven. Save supporting documents, such as W-2s, 1099s, and receipts for deductible business, medical and mortgage-related expenses, as well as retirement and charitable contributions. IRS record retention requirements may vary based on your unique situation.
  • Home improvement records: Keep receipts and other cost-related documentation as long as you own the home so you can calculate actual sale profits, which impacts capital gains taxes.
  • Home purchase documents: Save for seven years after selling your home. This might include home appraisal and inspection reports, as well as the documents you received at closing. If you’re renting, you can shred rental agreements after moving and receiving your deposit back.
  • Home warranties: Keep proof of warranty documents until they expire.
  • Brokerage/investment statements: Save for seven years after you sell the last investment.
  • Insurance policies: Keep as long as you have the policy. If the insurer sends you a revised policy, discard the old one.
  • Loan documents: Save the statement showing your most current balance on your car loan, student loan, personal loan and so on. Save the final statement, showing your balance is paid in full, for seven years.
  • Medical records: Keep doctor and hospital bills, as well as health insurance statements, for five years from the date you received the service.
  • Passport: If you were 16 years of age or older when your passport was issued, your passport is valid for 10 years. If you were under 16 when your passport was issued, your passport is valid for 5 years.
  • Retirement account statements: Hold on to these until you retire.
  • Car title: Keep as long as you own the vehicle.
  • Receipts for major purchases: Save receipts for big-ticket items — such as furniture, jewelry or computers — as long as you have the item. They might be needed to file an insurance claim.

Indefinitely:

Always keep personal identification and legal documents in a secure location indefinitely, as these are essential throughout your life. Examples include:

  • Property deeds
  • Social Security cards
  • Education and military records
  • Estate planning documents, such as wills and trusts
  • Confirmation papers showing beneficiary designations
  • Birth, marriage and divorce certificates, and adoption papers

It’s a good idea to scan and save digital copies of these documents. Keep the originals safely stored in a locked file drawer, fireproof box or safe deposit box.

Tips for safely storing and tossing files.

Whether you’re more comfortable storing physical or digital documents, or both, focus on creating a safe, reliable place and process that works for you.

Physical documents

  • For physical storage, consider using a secure filing cabinet, a fireproof and waterproof lockbox, or a safe deposit box.
  • Organize your documents in clearly labeled folders so they’re easy to find when you need them. Create categories like tax returns, estate planning and car loan.
  • Shred any physical documents containing personal information before tossing them to reduce your risk of identity theft.
  • Schedule time quarterly or annually to shred and dispose of outdated files.

Digital documents

  • For electronic storage, consider an external hard drive, flash drive or a cloud-based storage like Dropbox, Google Drive or iCloud.
  • Scan and save digital copies of important physical documents — like birth certificates, marriage certificates and passports — in case the originals are lost or destroyed.
  • Password-protect your digital records using strong passwords.
  • Password-protect any digital devices where you’ve stored financial documents.
  • Encrypt any documents or folders on your computer so only you or someone you authorize can access them.
  • Schedule time quarterly or annually to permanently delete outdated files.

The ideal storage system is one that’s quick and easy for you to access and is secure from theft and damage. Regardless of your preferred option, tell trusted friends or family members where your documents are stored and how to access them.

Additional resources for storing personal and financial records

Visit Experian and the Federal Trade Commission for more tips on how to keep your information safe from identity thieves.

The Internal Revenue Service also shares general record keeping tips for taxpayers, as well as tips for small businesses and self-employed individuals.

Having a plan to save and store your important financial documents can save you time and stress when you need to locate items quickly. Consider signing up for electronic statements and online bill payments to reduce paper clutter and simplify your financial life. Commerce Bank offers digital banking tools to help you quickly and easily manage your finances.