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Are you facing down a big stack of personal financial paperwork with empty promises of organizing them going through your head? Are you adding documents to a sad manilla folder while saying quietly to yourself “I’ll remember where I put that when I need it.” Well, I am here to tell you that it is time for some spring cleaning! Follow me while I take you on a simple financial paperwork spring cleaning journey to help you with the kind of de-cluttering and organizing that would make Marie Kondo proud.
Organize By Category (Not by Location… Like Your Email Inbox)
Organizing and simplifying your finances can help reduce clutter, lessen stress, and help you be prepared when the unexpected happens.
Begin by creating file folders with specific labels in a filing cabinet, or if you’re interested in going paperless, by scanning paper documents and then organizing them digitally into labeled folders with sub-folders. Labels and sub-folders might include:
Taxes (subfolder for each year)
Healthcare (one folder for each family member)
Legal (Social Security Card, Marriage Cert.,Estate, Wills, Trusts)
Bank Accounts
Investment Accounts
Retirement Accounts
Employment or Small Business Records (If you are a Small Business Owner)
Student Loans (one for each family member)
Mortgage
Utilities and Monthly Statements
Credit Cards
Real Estate (deed, tax assessment, closing documents)
Automobiles (one for each vehicle)
Insurance (life, disability, homeowners/renters, car, umbrella)
Spark Joy and Keep Only the Financial Documents You Need
As you begin adding documents into these folders let's look at what you should keep and what you can set aside and shred. Here are just a few, but I encourage you to download my complete list below.
How long should I keep my tax returns?
Keep at least three years of state and federal tax returns and supporting documentation on file. Supporting documentation includes records that prove any income, deductions, or credits claimed like your W-2, 1099, and end-of-year statements from banks and investment accounts.
If you think you forgot to report income and it’s more than 25% of gross income, keep six years of tax returns on file. If you are claiming a loss for worthless securities or bad debt deduction, keep records for seven years.
Keep all W-2s until you begin collecting your Social Security benefits at retirement.
Should I keep my healthcare documents and if so, for how long?
Will you apply for Medicaid (perhaps due to long-term care expenses)? If so, keep all financial statements and records of transactions for the previous five years to support your application for Medicaid, as there is generally a five-year look-back provision.
Do you have a Health Savings Account (HSA)? If so, keep all medical receipts from the date the HSA was opened.
Did you write off medical expenses on your tax return? If so, keep records for as long as you keep your tax returns (generally three years).
What legal documents are important to keep?
Are you a U.S. citizen? If so, keep a copy of your Social Security card, birth certificate, and passport.
Are you a foreign national? If so, keep all documents related to your entrance into the United States, such as passport, Green Card, and I-94.
Do you have an estate plan? If so, keep a copy of your Will, Trust(s), Powers of Attorney (General and Health Care), Living Will, and beneficiary designations on file, and store the originals in a safe place. Also, consider giving copies to people that play an important role in your estate plan, such as your agents, Executor(s), and Trustee(s).
Are you currently married? If so, keep your marriage certificate on file, which may be needed in case of a name change, proof of marriage for insurance benefits, and for obtaining a joint mortgage. If you have a prenuptial agreement, store your original copy in a safe place.
Have you been divorced? If so, keep your divorce papers on file.
Have you served in the military? If so, keep your military discharge papers as they may be needed to prove your eligibility for veteran’s benefits.
See my download below for more detailed information about what documents to keep and for how long. Sign up for my email list for more money-related tips like these.
Download my Document Guide for more information on the above topics as well as what Asset & Debt related documents to keep on file.
Disclosures
No investment strategy assures success or protects against loss. Investing involves risk, including the loss of principal. The information in this post is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision.
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