Creating an Organized Financial System

There are some papers that deserve special attention.  Documents to keep forever include: Social Security cards, wills, powers of attorney, birth certificates, marriage documents, adoption papers, divorce decrees, childcare orders, trust documents, business agreements, military records, citizenship or residency papers, death certificates of family members, and other such permanent records.

A safe deposit box is the ideal place to store many of these records, but not all!  You should not keep original copies of wills and powers of attorney in a safe deposit box.  Store these documents in a safe, secure place that you and your trusted family members and/or named individuals and executors can access in the event of an accident or upon your death.  You many also want to keep passports and any other documents you may need immediate access to on short notice in a secure home safe or with a trusted individual. 

There are also other important documents that should be kept, but only as long as they may be needed:

• Insurance policies – as long as they are in effect or until a claim could no longer be filed.
   
• Loan documents – until they are paid off.
   
• Titles, deeds and other real estate papers – as long as you own, rent, or lease the property plus any period thereafter for tax purposes.
   
• Employment contracts and offer letters - At a minimum, employment contracts and offer letters should be kept as long as the duration of your employment, however, these documents may be important in verifying employment in the future and you may want to retain these for at least as long as you plan to stay in the workforce.
   
• Employee benefits information – as long as you are employed or until the benefit no longer exists.
   
• Investment records – as long as you own the investment plus the three-year tax reporting period.
   
• Health and medical records - as long as you have pending claims and/or until the heath issue is resolved.  Some medical expenses may be tax deductible, so these records may need retained along with tax documents.
   
• Home improvement receipts and sales receipts/warranty information on major purchases – keep home improvement receipts for tax purposes and keep receipts for major purchases with any warranty information for as long as you own the item and could make a claim. 
   
• Childhood and student records - you should retain your child's immunization records and standardized test results for as long as your child is in school, this includes all post-secondary and professional-level education.  High school and college transcripts should be kept indefinitely as they may be helpful with future employment or even proving age or education history later in life.

Each month you will receive bills, statements, and other financial information that you will need to handle.  There is a great temptation to keep everything, but that is really not needed.

• Recurring monthly bills – Once you have paid your insurance, rent, mortgage and utility bills, there is no need to keep them.  You will have a cancelled check or other bank account records to document payment and unless there is something special about the bill, you can safely dispose of it. (Be sure to shred any documents that have account numbers or other sensitive personal information.)
   
• Credit card statements – Even though there is no requirement to keep these statements, you may want to save them for some period (a year or so) in case there is a dispute, you want to return an item, or if you want to be able to analyze your spending.
   
• Bank statements, check images, and cancelled checks – You should keep check images and cancelled checks that support any tax deductions and any that you think may come in handy.  Otherwise, once you have reviewed and verified them, you can shred them.  Bank statements are a bit different.  You may want to keep these for some period (three years or so) in order to document your payments for important items.  Together with your check register, you will be able to identify when and how much you paid for almost anything.
   
• Pay stubs - Pay stubs should be kept for at least one year until you can reconcile them with your W-2s and have filed the respective year's taxes. 

Receipts for ATM transactions and daily or routine purchases may be safely shredded once the transactions have correctly posted to your account or sooner if you paid in cash.  However, you may want to keep select purchase receipts according to the merchant's return policy in case you want to return an item.

You can also promptly shred any credit card, loan, or other solicitations you do not redeem; and you should always shred or safely destroy expired driver's licenses, other ID cards, debit and credit cards.  Other items ready for the shredder include any non-retainable papers and mail that contain sensitive personal information such as used prescription information and labels, credit reports, unsolicited mail offers, etc.