Short-Term (1 Year or Less)
Some documents only need to be kept briefly before they can be safely discarded or digitized. These include:
- Receipts – Keep them until you reconcile your bank or credit card statements unless they’re needed for tax deductions or warranties.
- Bank Statements – Hold onto these for a year in case of discrepancies or for budgeting purposes. If they’re available online, you may not need paper copies.
- Utility Bills – Keep them for a year unless you use them for tax purposes or proof of residence.
- Credit Card Statements – Store for a year unless they contain tax-related purchases, in which case, keep them longer.
Medium-Term (3 to 7 Years)
- Tax Returns & Supporting Documents – The IRS recommends keeping tax records for at least three years (or up to seven years if you file a claim for loss or if there are potential audits).
- Pay Stubs – Keep them for a year until you reconcile them with your W-2 form.
- Loan Documents – Keep records for the duration of the loan and seven years after it’s paid off in case of disputes.
- Medical Bills – Retain them for at least three years for insurance purposes and tax deductions.
Long-Term (Indefinitely or Until Needed)
Certain documents should be kept indefinitely or for as long as they remain relevant:
- Birth Certificates, Social Security Cards, Passports, Marriage Licenses, and Divorce Decrees- Keep these forever, as they are vital records.
- Property Deeds & Mortgage Documents- Retain them as long as you own the property and for at least seven years after selling.
- Investment Records – Keep records of stock purchases and sales indefinitely to track cost basis for tax purposes.
- Estate Planning Documents – Wills, trusts, and power of attorney documents should always be stored securely.
You can maintain a clutter-free and efficient financial record system by keeping only what’s necessary and shredding outdated documents. Consider digitizing records for added security and convenience!
