It’s easy to lose track of all of the different document retention periods that exist for the various reasons we might need to provide them one day. It can be likely tempted to shred everything to be done with it and not have to worry about storing them anymore. Still, keeping good records will reduce clutter, prevent identity theft, and increase our preparedness level for the time(s) we will need the document(s).
The principles of good record management for businesses also pertain to personal recordkeeping. They are accountability, transparency, integrity, protection, compliance, and accessibility. Consider the following principles (and time frames) when deciding what to keep or shred for your document management plan.
Documents to Shred Immediately
The following are documents that you should shred immediately to protect your personal information:
- ATM receipts and reconciled paper bank statements
- Old credit card bills (after charges have been verified)
- Paid utility bills
- Expired warranties
- Canceled and voided checks
- Junk mail
- Store receipts (after the return period is over)
- Any statement with your credit card number, social security number, account number, or other personal information
Documents to Shred After 7 Years
While you should shred some documents immediately, some should be kept for about seven years to refer to their information.1
Here’s a list of what to shred after seven years:
- Paperwork related to an estate settlement or a loved one’s death
- IRS tax returns (the IRS has three years for an audit, which can be extended to six years if an investigation is warranted)2
- Tax-related receipts
- Other tax forms and tax records
- W-2s and 1099s
- Investment records (shred them seven years after you’ve sold the securities or closed the investment accounts)
Documents to Shred After 10 Years
You should keep some documents for reference for up to ten years, including:
- Medical records, such as hospital discharge papers, prescriptions, and medical tests
- Receipts for home improvements (kept receipts until you sell your home and need them to calculate potential capital gains taxes)
- Purchases with a warranty (i.e., major appliances)
Documents You Should Never Shred
Of course, there are some important documents you should never shred, such as:
- Legal records
- Birth certificates
- Social security cards
- Divorce decrees
- Death certificates
- Wills or living wills
- Marriage licenses
- Insurance documents
- Mortgage documents
- Vehicle purchases (until you sell the vehicle)
- Stock, bond, or other security confirmations(as long as you own them)
In addition to the lists above to help you decide which documents to keep or shred, the Federal Emergency Management Agency (FEMA) has compiled an Emergency Financial First Aid Kit for paper documents to have handy in an emergency.3 Storing these documents in a loose-leaf binder with plastic sleeves is an excellent way to keep them easily accessible.
Once you know what documents to shred and systematically file the rest, you’ll be ready to file taxes, manage your budget, and easily locate the required papers in case of legal actions or audits. You can rest easy, knowing your paperwork is all in order—safe and secure.
I’ll admit, record keeping is one of my least favorite activities in personal finance. God has graciously blessed me with a very organized wife for which I am very grateful. However, as it relates to not only our financial lives, but also in our spiritual lives, we are called to live a life of integrity. The definition of integrity is, “adherence to moral and ethical principles; soundness of moral character; honesty.” We can show integrity through our diligence in following natural laws and principles, even if we don’t necessarily agree with them.
Psalm 18:25(NKJV) reads, “With the merciful you will show yourself merciful; with a blameless man you will show yourself blameless.” While this verse can be applied to so many different areas of our lives, I think the key word in this scripture is show. In this passage, the word show is a verb, indicating action and defining the physical act of doing something, not just saying or giving lip service to it. I think this act of showing pleases God in our lives because we are carrying out an action that God is telling us to do, not just hearing or saying something and then leaving it at that. We are continually given opportunities to demonstrate integrity. What we do with those opportunities is up to us. What other areas in our lives can we work to show ourselves faithful and not just say it?
Evergreen Financial Group is a Fee-Only Financial Planning and Investment Firm located in Billings, MT serving clients in Montana, Wyoming, Utah, and virtually across the country. Evergreen Financial Group specializes in working with Christian families, including Young Professionals, Current and Future Retirees and Church Staff Members.
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