Apartment lease, insurance policies, credit card receipts. These are just a few of the many financial documents you may encounter. To maintain control over these records, consider a system of paper copies, digital versions, or both.
When sorting and tossing financial documents, be sure to keep these documents for the time suggested:
- Tax records – seven years; unless you have a simple tax return, then three years
- Bank, investment statements – keep annual statements indefinitely
- Estate plan documents, social security card, birth certificate, marriage, divorce, adoption records – indefinitely
- Insurance policies – only keep current policies, not expired ones
- Loan documents – until debt is paid off
- Real estate transactions – three years after closing
- Proof of ownership (titles) – as long as item is owned
- Medical bills – one year after paid
When in doubt as to the length of time to keep an item, create a digital copy of the financial document. Paper copies should be shredded when the document is no longer needed.
Three common options for the physical storage of documents are:
- A locked cabinet allows you to have easy access to financial records in your home. Beware that the contents may be accessed by a thief or damaged by a fire or flood.
- A fireproof safe offers greater protection. However, it could be stolen without proper precautions such as bolting it to the floor.
- A safe-deposit box at a bank (for a fee) can provide greater security for your documents and valuables.
Digital storage of documents might include your home computer, an external drive, or a cloud service, such as Dropbox, Google Drive, Microsoft One Drive, iCloud or Amazon Cloud Drive. For your digital documents:
- download from the source (or scan) each document, saving them into folders by type of record
- secure your information using password protection, file encryption and two-factor authentication
- back up your data on a regular basis
A hybrid system (physical and digital) is often recommended. Then, if paper copies are lost or destroyed, or computer files crash, you are protected with access to the other source.
Organizing financial paperwork to allow access by family members is especially important for estate plan documents. Your attorney can store original documents. Online document storage services for estate planning can be located with an Internet search.
The main documents that should be part of an estate plan file are:
- Will or trust; Powers of attorney for finances and health care
- Organ donation form; Living will; HIPAA release
- Letter of instruction for your heirs; beneficiary designations; password list
- Bank and investment statements; retirement account documents
- Real estate deeds and titles; life insurance policies; funeral instructions
- List of important personal property, such as jewelry, artwork, and estimated values
Updating estate plan documents when a life change occurs is vital. Your attorney can assist with this process whenever a death, birth of a grandchild, divorce, or sale of property takes place. An annual review of your estate documents is also recommended.
For additional information on storing financial documents, go to:
Teaching Suggestions
- Have students list the financial documents and records they currently use.
- Have students create a visual to communicate the system they might use for storing their financial documents.
Discussion Questions
- What features would you recommend for an effective and efficient financial document storage system?
- Describe financial difficulties and money management concerns that could occur if a person doesn’t have an appropriate financial documents storage system.
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