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Many people save no financial records or papers whatsoever. If you are one of those people, allow me to tell you that this is a very bad idea. There are many cases in which you will be extremely relieved that you saved certain papers, or had the correct things on hand. However, with lots of financial transactions going on, it can be hard to know which ones you need to save, and which ones would be fine to throw away. Here are some of the records that you need to save.

Bank Records. You should keep bank records for at least a year, but if storage is not an issue then it couldn’t hurt to keep them forever. You can sort them according to their importance. If your checks represent large purchases, business expenses, or anything pertaining to taxes, then they are more important in the long term. You can shred the rest.

Savings Records. If you contribute your money towards a retirement or savings plan account, you should save the statements you receive. If you get monthly or quarterly statements, save those temporarily. Once you get the annual summary, make sure it matches up with the previous statements, then get rid of everything but that. Be sure to shred it thoroughly to make sure nobody else can retrieve your personal information. You should keep the annual statements forever, or at least until you are finished with the account.

Tax Records. It may seem paranoid, but it is probably a good idea to save everything related to your taxes. This includes returns, records, checks, and receipts. The IRS performs many audits each year, and these can be a nightmare if you haven’t got the proper records. But, if you’ve got everything sorted out and you’re as honest as possible, you can get through it with minimal stress. The IRS has a certain period of time during which they can put you under suspicion for anything they notice in your filing. This period is 3 to 6 years depending on what exactly the problem is. So, you should keep all tax-related documents for a minimum of 7 years.

Bills. You should keep your bills for about a year. Once a year, go through the ones that you have saved up. If the transaction is finished and everything went smoothly, feel free to shred it. However, if the bill is for a big purchase, you should hold on to the bill permanently. It will come in handy if you ever have to deal with warranties or insurance, in case the item gets damaged, stolen, or lost.

Filing 101 - What to do next A good way to make sure they are in order is to keep a filing system. Start by identifying convenient areas for 1. Regularly used or “current” files. 2. Hardly used or “dead” files 3. A safe deposit box that would store any document that are expensive or hard to replace

If you’ve got documents and you aren’t sure whether to keep them or not, it’s probably a good idea to keep them. You never know when it will come in handy to have proof of your financial activity.

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