spring cleaning of your financial records

With the weather starting to warm up around the country, many people start their annual ritual of a Spring Clean by getting their house organized and getting rid of clutter.

But how often have you done a “Spring Clean” of your financial records?

Financial paperwork and records can significantly contribute to clutter, and being free of all that paperwork can certainly streamline your records and save space in your home.

That said, you don’t want to risk throwing something out that you might need later.

As tax season winds down for the year, there are a few guidelines you can keep in mind for what papers can be thrown out and what should be kept:

  • In general, you should keep previous tax returns and all related information for at least three years after filing. If there were issues with a return, like suspicions of fraud or underpayment, keep the return indefinitely in case the issue comes up at a later point.
  • You may need to hold paperwork related to investments or purchase of real estate for a longer period of time. This means that different papers will be kept for different amount of times depending on the asset; you’ll need to check each property for information relating to depreciation, amortization or depletion deduction schedules. Your accountant can help you figure out the timeline for this.
  • Review other items, like bank statements, insurance plans, loan information and credit card bills to see whether they’re still relevant. Any information relating to accounts that have been closed can be gotten rid of. The same goes for warranties and user manuals: If the item it’s referring to is no longer in use, you do not need the papers for it.
  • Go ahead and discard old pay stubs, cancelled checks, expired contracts, expired policy information and any other information related to accounts that no longer exist.

Keep your financial documents in order, it helps to store items that you know will never be thrown out, like birth and marriage certificates, separately from your other documents.

Then group the other documents together by date and type, allowing you to see at a glance which files are no longer relevant.

It may be sufficient to scan and keep a digital copy of some things while throwing out the print version. When you do throw out a print version, be sure that it’s thoroughly shredded or burned to prevent identity theft.

Once you get an organizational system in order, you’ll have an easier time of keeping your paperwork from piling up in the future.

This spring, take the time to carefully review your documents, weed out the unnecessary items and store the others in a way that will make future organization a breeze.