Every year you endure the same level of panic: taxes are due and you must sift through a shoe box full of receipts to find the information you need for a proper return. Elsewhere in your home, drawers bulge with bank statements and paycheck stubs, until your home office resembles a cluttered museum of personal finance. You know you should take some of this paper to a shredding service, but you worry you’ll toss something important. Just how long do you need to keep this paperwork, anyway?
When you devise a system for filing away financial documents, you’ll find it’s easier to earmark stacks for the shredder while the vital information stays safe. The more you turn to online banking and finance the better, for you leave a smaller paper trail and less waste, but for now let’s consider how long you must keep things before you fall into complete hoard mode.
First and foremost, if you do not have some kind of filing system in place, do so immediately. Whether it’s a series of accordion folders or small boxes, anything is better than haphazard piles of paper everywhere. Clip or band paperwork dates according to month or year, and keep an eye on the calendar to determine what needs to go and when.
Eligible to Shred As Soon As Possible: Receipts for products and services you won’t return or write off later can be disposed of immediately. Bank deposit and withdrawal slips may be held until you successfully balance your accounts at the end of each month. As for monthly bank and credit card statements, these are typically kept until tax time until you determine which statements are needed for deductions.
Eligible to Shred After a Year: Documents used for your return – pay stubs and certain investment paperwork like annual reports, may be destroyed once they are reconciled with your tax information. Because many financial institutions allow you to opt for e-mail reports, this is a big help in reducing the amount of mail you get.
Warranties and Insurance: As you renew policies, it is not necessary to keep expired policies in hand. Same goes with receipts and warranties for furniture, cars, and electronics. As the warranties expire or you get rid of the objects, you can shred the paperwork.
Knowing what to shred and when will work to clear your home office of unnecessary paper, as well as protect your finances. The sooner you shred expired information, the less likely it will fall into the wrong hands. Take note of what you have and prepare it to go to a professional shredding service today.
