Should You Stash or Trash These Documents?
If that mountain of bank statements and other financial documents is starting to overwhelm you, read this guide for what—and for how long—you actually need to save those papers.
A version of this article originally appeared on Learnvest.com.
The neurotic side of us always feels like we should save receipts just in case. But, the truth is, we’re not sure what it’s in case of.
So, how long do you really have to save those documents? (Note: When you’re ready to ditch any of these docs, don’t just throw them in the trash. They have your financial info, so shred them; if you don’t have a shredder, remember to rip them up into little pieces—and maybe throw them out in separate trash baskets.)
In the age of online account statements, transactions on your credit card are generally available online within days. Once
you check your bank statement online to make sure that the charge went through correctly, you can toss that grocery receipt
right in the trash.
Credit Card Statements
Out with the old, in with the new! Once you have your most recent statement, its predecessors can hit the recycling bin (post-shred,
of course). The idea is to save your statement long enough to make sure it’s accurate and that you aren’t double-charged for
something over two statement periods. Consider this a reminder: Always read your credit card statements!
Hang on to personal tax documents for seven years, so that you’ll be able to answer to the IRS if you get audited. If you
do your taxes with a software program, just save the PDF of your completed return. Best of all, it’s paperless!
Mutual and Index Fund Prospectuses
A prospectus, the comprehensive report you’ll receive about a fund or company after you buy shares of its stock, is issued
annually. After reviewing the information, you can discard any paper copies. This information is simply for you and your reference.
If possible, eliminate the paper altogether and view your prospectus online.
Explanation of Benefits
After going to the doctor, you’ll receive an explanation of benefits (EOB) form, which is just a fancy name for the paper
that details the insurance transaction that took place. Figure out how long to save your EOB by using your best judgment;
if you’re in the middle of a major medical undertaking, hold on to it. If the insurance has fully covered all charges and
that medical incident is complete, you can let it go. You’ll want to have your EOB if you need to dispute any charges or claims,
but once something is settled, you’re fine.
More than anything, we’re big supporters of going paperless. Make sure that you receive all of your bank statements and credit card bills online and, if you’re comfortable, choose not to receive paper copies. There are two benefits: less clutter and stress for you, plus fewer trees that have to die.
As a general rule of thumb, once the financial transaction is resolved, you’re absolved. So, once the charges have gone through correctly, insurance payments have been settled, and the dust has cleared, let go of the clutter. Now that you’ve got a clear desk, it’s time to start working on that clear conscience…
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