SOS – suffocating in an avalanche of financial documents! Does this sound familiar? Try as we might, filing bank statement after bank statement can leave us with a pile of A4 ring binders, and little space for anything else. But surely you need all this stuff? It’s a necessary evil!
Unless you have a filing cabinet about the size of a skyscraper, you’ll never manage to organise your documents effectively. The entire rainforest of paper you accumulate can easily be replaced by online banking. Save the environment and save yourself the hassle of organising all those documents by only filing what you have to.
So What Do I Keep?
There are some documents that you should stick to, and never throw away: birth/death certificates, adoption papers, citizenship papers, military records, marriage/divorce papers, immunization records, passports/social security cards, and legal documents.
These files are extremely hard to replace, so you should treat them with the utmost care. Store them in a locked cabinet or a fireproof safe.
Keep all your tax-related documents to hand. You may need an extensive backlog for amendments or audits. To be safe, all tax-related files should probably be a permanent fixture in your office. This goes for real estate too – their life expectancy should be 7 years at least. You should keep:
• Proof of purchase
• Records of improvements to real estate
• Taxable brokerage statements
• Retirement account statements
These files are only to be kept for a year, maximum:
• Employment records and pay cheques
• Vehicle-related documents
• Bank statements, unless you have online access
• Insurance papers
Documents like council tax or banking statements are handy as proof of identification – you’ll probably need about six months’ worth in storage. Bank statements become useless after about 12 months, so keeping them around just maximises the clutter.
Bin it: Financial Records You Can do Without
Now you’ve organised your necessary papers in to a much slimmer, accessible filing system, get ready to recycle your domestic bills and credit card statements. It may be an idea to conduct all transactions and billing online. E-bills are faster and safer than a postal service.
Keep your receipts in a temporary receipt file, until you can compare them with your bank statement. Once everything matches, recycle them and start afresh. Save proof of purchase for big items, in case you need to ask for a refund. If you need any receipts for business or tax purposes, of course, keep these too.
If you pay by card all the time, it’s less important to keep receipts, except for warranty purposes on large items. A record of your purchase will be kept on your bank statement. Keeping receipts only becomes necessary if you directly pay by cash.
You can scan copies of the most important documents in your house on to your computer and back them up with an external hard drive. It’s never a good idea to get rid of original copies; online scans only serve as proof of ownership, if you were unfortunate enough to lose them.