‘Tis the season for deep cleaning, decluttering and storing away winter clothes in anticipation of warmer temperatures to come. But spring cleaning isn’t limited to scrubbing the floors or washing the windows. Have you considered the benefits of organizing your financial records as well?
Understanding how to organize, maintain and dispose of your records is critical to healthy finances and safeguarding your personal information. Not only will you have easy access to the most up-to-date files, but your spouse and other family members will be able to locate your important information in case of emergencies.
Here’s how you can best set up and organize your financial records:
How to Organize Your Financial Records
1. Gather your financial documents
First and foremost, you’ll want to locate all your important financial documents – from utility bills and financial statements to tax records and receipts. To help ensure you have all the necessary paperwork, we recommend following this checklist:
- Bank documents
- Pay stubs
- Utility bills
- Tax records
- Life documents and major financial events
- Paid-off loans
- Estate planning documents (power of attorney, will, etc.)
- Other financial records (insurance, property records, etc.)
- Receipts
2. Properly dispose of outdated paper documents
To protect your identity and prevent fraud, make sure to properly dispose of any paperwork with your personal information on it. Using a shredder can be an effective way to safeguard your information. Double-check the chart below to determine when it’s safe to toss your financial files:
| Bank Documents | Destroy checks that have no permanent importance but keep copies of checks or statements related to your taxes, business expenses and housing and mortgage payments. If audited by the IRS, you’ll need bank statements for up to three years. |
| Pay Stubs | Keep paycheck stubs until the end of the year to cross reference with your W-2s to ensure they match. |
| Utility Bills | Throw out (unless you need them for tax purposes). |
| Tax Records | Keep tax records for at least three years from the date you filed your original return or two years from the date you paid the tax – whichever is later.Most experts recommend destroying these after six years. Keep copies of the tax return itself indefinitely. |
| Life Documents and Major Life Financial Events | These can include birth certificates, marriage certificates, diplomas, divorce decrees, military records, legal filings and inheritances. Store in a safe deposit box indefinitely. |
| Records of Paid-Off Loans | Retain for seven years. This includes car loans, student loans and personal loans. |
| Insurance Documents, Active Contracts, Property Records or Stock Certificates | Keep these items for the life of the policy or until the contract is complete.For homeowner records: Save the deed and title to your house indefinitely. If you plan to sell your home, keep receipts for any home improvements (if applicable) for seven years. You may need these receipts to lower the taxable gain when you sell. |
| Life and Estate Planning Documents | Keep the most current copy of your power of attorney (healthcare and financial), will or advance directive, trust and financial plan documents. |
| Receipts | Receipts for major purchases such as furniture and electronics should be kept if you own the item. For anything you might itemize on your tax return, keep these receipts for three years with your tax records.Save receipts for medical expenses for one year to show proof of doctor visits and medical claims. |
For future record keeping, you could consider going paperless. Paperless statements and documents prevent clutter and help you save extra storage space in your filing cabinets. If you’re interested in going digital, you can easily manage paperless statements and documents using MyJFG and our digital wealth solutions.
3. Make a filing system
It’s easy to lose track of important documents throughout your home. Here are a few ideas on how best to organize both your physical and electronic records:
- Physical records:
- If you have very few documents, use a folder or binder to file them away.
- If you have a lot of physical records, use a file box or cabinet to organize them.
- Keep physical records in a safe place and consider having multiple storing options in case of fire and water damage.
- Digital records:
- Organize and manage your paperless statements and documents using MyJFG and our digital wealth solutions.
- You can also create file folders on your computer or tablet.
- If you store files on your computer, make sure to backup these folders using an external hard drive or cloud storage service.
4. Protect your information
Create a list detailing where your records are stored and how to access them. Hide the list in a secure place or with a trusted family member or friend and be sure to keep a copy. Reference each type of account, the identification number and the contact information for the individual to get in touch if necessary. This also pertains to any electronic records you may have.
For electronic records, make sure you store your information – including your account numbers, login IDs and passwords – in a safe place, such as a password-protected folder on your hard drive. For more information on protecting your information, visit our Security Tips page.
5. Review and manage your records annually
Now that your records are up-to-date and organized, make sure you put time aside each year to sift through your records and purge anything that you don’t need on file. For physical copies, make sure to shred these items so your personal information isn’t accessible.
Happy spring cleaning! If you have questions about accessing or storing your financial information, contact an advisor.
