Organize Your Financial Documents

January: Organize your financial documents. 

Goal: Assemble and organize your financial documents (create and maintain your financial first aid kit)

Being financially organized will help you prepare for any financial emergency, whether it’s a natural disaster, disability or death. It’s important to be financially prepared at all stages of your life, whether you are just starting out, in the middle of your working life or in retirement. 

How do I organize my bills and finances? 

You should organize your bills and finances by following the Get Ready system which  is clear and helps you stay up to date.  You can create a financial first aid kit which includes all of your financial documents such as bank statements, insurance policies, investment account statements, loan documents and tax forms. 

Your financial first kit can be a combination of paper documents and digital documents, whichever works best for you. You can use the Get Ready system to organize your documents whether they are physical, digital or a combination. For physical documents, you’ll need a binder with tabbed dividers for each of the sections below. On your computer, set up a folder called Financial First Aid Kit and then sub-folders for each of the sections below:

What financial documents do you need? How long should you keep financial documents? 

Marie Kondo’s KonMari method is inspiring everyone to get rid of stuff. Lots of stuff.  However there are some things you shouldn’t get rid of, namely: certain personal and financial documents.

Yes, it’s important to cut down on the clutter, but what documents, exactly, are non-essential, what’s a short-term keep, and what’s a long-term document? Below are just a few recommendations from the Personal Papers and Documents Worksheet: 

  • Bank account records: Keep statements & canceled checks for 6 years (receipts until statement reconciliation)
  • Car (title, registration, repair records): Until 6 months after sale
  • Home purchase documents: Keep on had for at least 6 years after sale of home
  • Pay stubs: Keep for 6 years
  • Credit card statements and documents: If used for tax purposes, keep for 6 years; otherwise shred statements and receipts after reconciling statement, or longer if you wish to return something
  • Student loan records: Keep indefinitely as proof of payoff
  • Rental agreements: Retain for up to 6 years after agreement is terminated
  • Health insurance policy and documents: Until coverage ends or is canceled

The Personal Papers and Documents Worksheet has recommendations for when you may be able to safely purge a financial document. If there is no purge date, you’ll probably want to keep that document forever or use your best judgment on how long to keep it. Personally, I keep items in files for seven years for any closed account with all of my tax documentations, and after seven years, I destroy the physical documents. With the ability to scan documents, I keep digital copies forever. All purged documents should be shredded to help prevent identity theft. Please note that these are just recommendations and are not legal or tax advice. You may wish to seek expert advice if you have concerns about purging a document. 

Next steps:

Access the Get Ready Toolkit to download the Get Ready worksheets (here).

The Get Ready Toolkit also includes a subscription to the Get Ready Newsletter which follows the Get Ready Financial Calendar to help you stay financially prepared.

Pick up a copy of Get Ready: A Step-By-Step Planner for Maintaining Your Financial First Aid kit to guide you through all the sections. Pick up a copy on Amazon (here), purchase a digital copy (here) or learn more (here).

Learn More:

How Long Should You Keep Documents (ABC News: Seven on Your Side with Micheal Finney).