SmartBanking Blog

Spring Clean Your Financial Documents

                We made it! Spring is just around the corner, and it’s time to start your spring-cleaning regimen. This year, we encourage you to include adding your financial documents to your to-do list. Not only will it help make tax season go smoother, but it will also get you ready for the next steps on your financial journey.

Declutter Financial Records

                Depending on the financial document, start by getting rid of anything past its date or relevance. Below is a helpful guide to how long you should keep certain documents.

Tax Documents: The IRS recommends keeping any relevant tax documents for three years from the date of filing if your return meets standard conditions. However, experts generally recommend seven years just to be safe, especially in the case of an audit. Some experts recommend keeping tax documents as long as possible. It is best to check the statute of limitations in your state and with the IRS before deciding.

Asset Receipts: If you have a receipt for a vehicle, remodeling project, or any other asset, it is best to keep these receipts for as long as you retain that asset.

Non-Tax-Related Financial Documents: Things like bank statements, credit card statements, investment statements, and pay stubs fall under this category. Usually, a year is a sufficient amount of time to keep these. However, use your best judgement on a case-by-case basis to decide on these documents.

                To limit getting overwhelmed, try to gather all your documents in one place. Once you have sorted through everything, make sure you properly dispose of your sensitive documents. Even things like old receipts can contain enough information for criminals to steal your identity. To properly destroy documents, shredding is the best practice. The Savings Bank will be hosting our annual Shred-It Day to aid in destroying your sensitive documents. Keep an eye on our Facebook page to learn more!

Establish an Organization System

                Now that you have gotten rid of unnecessary documents, make sure your organization system is still working for you—or come up with a new one! For ease of access, it is usually best to keep documents all in one place. Safes are a great place to store all these documents to keep them readily available to you – and only you. However, locked file cabinets or bins can be just as effective. Separate files by year, asset, or however makes sense to you. Just make sure each section is clearly marked.

Digitize Necessary Documents

                If possible, digitizing your records under password protected files in a cloud or other file management app is the most effective way to store your financial documents. Not only do you eliminate any clutter from physical records, but they are always at your disposal.

                Digitizing your financial records can make it incredibly easy to get going on your financial goals for the year. For instance, if you are looking to mortgage a home, you can easily email files of your past bank statements and tax returns!

                Spring cleaning your financial documents should be added to your list as keeping records neat and tidy can aid your financial goals. Remember, though: how you dispose of your documents is just as important as how you store them.

Sources:

https://www.forbes.com/advisor/taxes/financial-documents-what-to-save-what-to-throw-away/

https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records