Financial Records…How Long Should You Keep Them? INSPO EXCLUSIVE!

from our gorgeous financial contributor blaire

Financial Records…How Long Should You Keep Them?


Disclaimer ladies: this post pertains to those of you here in the States. Unfortunately I’m not familiar with other countries protocol along these lines….except Canada. I’ve heard they’re similar to us, but they do have different laws and regs, so I would recommend you do your research depending on where you’re located. 

One of the most asked questions that I get is ‘how long do I need to keep {insert document here}?  So while this is not a complete, fool-proof list, I tried to put the most popular documents I get asked about on here and consolidate them a little bit. A cheat sheet, if you will.  You can get inundated with paperwork, and while it’s better to be overly cautious, it’s not necessary to keep every little document.

So without further ado…..

What should I keep for a year?

  • Bank statements needed for tax purposes.
  • Transaction confirmations/statements on investment/savings/bank accounts (on savings/bank accounts, I’d just wait until it’s posted then chances are, you can just toss it then….no need to hang on to it for a year)
  • Pay stubs (just to make sure what shows up on your stub is also what’s on your W-2)
  • Quarterly/monthly statements from your investment accounts (IRAs, 401ks, any other type of retirement plan or just a savings account that is invested). These can be shredded once you get your annual statement (usually will come in January)

What should I keep for 7 years? 

  • Annual statements on your different accounts, whether it be retirement accounts, UTMA accounts, individual accounts, 529 plans, etc.
  • W-2s, 1099s, K-1s…..basically any tax document supporting any income received by you
  • Receipts to support deductions on your taxes
  • Stock certificates (Supposedly you can throw these away after you sell the stock, but I’d recommend retention for cost basis purposes)

What should I keep forever?

  • Tax returns (Some recommend tossing after 7 years, but should the IRS find that you underreported, they can come back to you anytime, regardless of the # of years that have passed)
  • Any documents to support cost basis prior to 2011 (brokerage firms are required to report this information now)
  • Buying/Selling of home closing documents until the residence is sold out of your possession (and it’s recommended to keep those around for 7 years or more after you no longer own it)
  • Marriage licenses
  • Birth certificates
  • Wills (I would recommend an update every 5 years or so)
  • Adoption papers

A lot of these documents are electronic, meaning they are stored online somewhere. While this is extremely convenient, I would recommend keeping physical copies of the ‘7-year’ or ‘forever’ documents.

Why you ask?

Ever heard of a little thing called ‘hacking’? Yea. It can screw up a lot of things. (Lifelock ladies, lifelock. It saves many an identity). And I like to be safe rather than sorry. You don’t want the IRS knocking on your door due to your inability to produce documentation. Get yourself a fireproof, waterproof safe and lock those babies up.

Hope this helps y’all out a bit! Stay tuned for tips on organizing these documents in the near future….tantalizing info, I know. Get excited you guys!

Also? Not a spokesperson for Lifelock. Just a fan.

{photo courtesy of flickr}

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