Organize Your Financial Documents With These 10 Helpful Categories

Can you quickly locate last year’s income tax return? Do you have the contents of your wallet and your account information recorded somewhere in case it is stolen? Can you find your homeowners insurance policy? If you can’t answer ‘yes’ to these three questions – don’t panic – but you may need to take some important steps towards getting organized.

The benefits of organizing your records include simplifying your finances, reducing stress, being prepared for unexpected events and having more time for fun activities. You will need to identify what to keep, who will maintain the records, where to keep items and when your files should be updated. Most importantly, communicate to a family member or friend what you have done so they can help if needed.

I recommend the following 10 categories to separate your documents (with examples):
1. Financial Management – bank statements, credit card information, loans records
2. Investments – stocks and bonds, IRAs, savings bonds
3. Income Tax Information – tax returns, supporting documents including charitable gifts
4. Insurance and Annuity Documents – original policies and recent statements
5. Estate Documents – wills, powers of attorney, trusts, living wills
6. Legal Documents – real estate settlements, birth/marriage/divorce records, passports
7. Employment and Military Records – employee benefits, military service and discharge papers
8. Home Records – major renovation receipts, appraisals, list or video of home contents
9. Medical History – doctors, current medications, allergies, summaries of recent appointments
10. Leave a Legacy – personal letter of instruction, family history, wishes for family members

If you have made it this far you are probably wondering what you can get rid of or how long to keep old records. While there are many opinions on this matter, here are my guidelines. Please err on the side of caution if you think you want to hang on to something longer.
Keep 7 Years – Year-end bank/brokerage/retirement statements, cancelled checks, credit card statements, major expense documentation, income tax returns and supporting documents.
Keep Until Disposal – Home improvement records, cost basis of investments, vehicle titles, service contracts/warranties, real estate deeds and settlement sheets, loan statements, stocks, bonds and CDs.
Keep Until Updated – Listing of safe deposit box contents, monthly bank statements, quarterly retirement and pension statements, list of credit card numbers, annual insurance policy statements and inventory of household items.
Everything else should be kept permanently. If you have a large volume of files you should definitely consider scanning and saving to your computer or other hard drive to save space. Permanent records should be kept in a safe deposit box or a fire-resistant safe. All other documents should be kept in an easy to access file. All documents scanned to computers should be backed up regularly.
Once all of your hard work and planning is complete, don’t forget to communicate where things are to someone else!

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About the author

Michael Helveston, CFP®, CRPC®

Mike Helveston, CFP®, CRPC® is Director of Adviser Services at Rodgers & Associates. He manages the team of advisers and is responsible for maintaining the firm’s financial planning process. In addition, he provides comprehensive tax, estate and investment planning advice to guide our high-net-worth clients toward their financial goals. Mike joined Rodgers & Associates in 2007 after starting in the profession over 15 years ago with Vanguard.

Mike is a contributor to Forbes, has been quoted in the Wall Street Journal and has also appeared on television and radio discussing various financial planning issues.

Mike has served the community as a volunteer mortgage counselor with Tabor Community Services, a student financial literacy volunteer for Junior Achievement and as a mentor through Bridge of Hope. His hobbies include running, golfing with friends, listening to music and watching professional sports. He resides in Downingtown, PA with his wife and three children.

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