All You Need To Know About Preserving Your Financial Documents

As a responsible adult, there are some things you should learn how to do. Keeping track of your financial documents is at the top of that list. You should know what financial records you’ll want to keep and how long you’ll need to retain them. 

Having the right financial documents handy for the proper length of time can save you a lot of headaches and help you to be fiscally responsible. We cover what you need to preserve and for how long below. 

Five Financial Documents You’ll Want to Keep

Generally, you’ll find that keeping track of five types of financial documents makes sense. These include property documents, tax documents, investment records, pay stubs, and loan documents. If you can save all of these, you’ll find that investing, paying off debt, doing your taxes, and other tasks become much simpler. 

  1. Property documents will include anything having to do with property you own or lease. If you’re a homeowner, that might be the deed to the property, which proves your ownership. If you rent, it could be a rental agreement with a building manager or company. 
  2. Tax documents will often include a printed copy of your tax return. You might do your tax return yourself if it’s not very complex, or you could pay a company like H & R Block to do it for you. Either way, keep a copy of your return.
  3. You’ll only need to keep investment records if you have investments, such as a mutual fund, stocks, or bonds. At a minimum, you should get quarterly statements from your brokerage about how your investments are doing. 
  4. Having your pay stubs handy can be useful when it’s time to do your taxes. You might receive a pay stub every week, every couple of weeks, or every month. 
  5. Finally, you’ll want to keep any loan documents if you have any outstanding loans. Until you fully pay off that loan, keep any paper correspondence related to it. 

How Long Should You Retain Those Records?

Not everyone always agrees on how long you should retain your financial records, but there are some general guidelines you can follow. For instance, the rule of thumb with tax returns is to keep them for seven years because if the IRS ever audits you, they might go as far back as six years trying to find financial irregularities. 

To be as safe as possible, you can keep any of the other financial records we mentioned for seven years as well. You might also hold onto them for longer than that if you know they still apply to your everyday life. For instance, if you’ve lived in the same house and owned it for longer than seven years, you’ll still need to retain the deed for as long as you remain there. 

Where Should You Keep Financial Documents?

The best place to keep financial documents is in a fireproof safe. That purchase can be a little costly, but it’s well worth it, especially if there’s ever a fire or some other unforeseen disaster. 

You might also consider renting a safety deposit box at a nearby bank. 

Even though many documents exist digitally these days, retaining original financial records always makes sense. Try to keep them in the same location so that you never misplace any of them.  

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