You have a lot of financial documents, but do you know what you should do with them?
In this article, we’ll talk about why you should keep your bank statements and for how long. We’ll also tell you how long you should keep your other financial documents as well.
Why Keep Your Bank Statements?
As the world moves further and further towards digital spaces, it’s important that you keep as many physical copies of records as possible. Every couple of months there seems to be another data breach story in the news where some big box store’s credit card database and millions of cards were leaked to the public. To protect yourself from these breaches, one of the best things you can do is hold on to your bank statements. At the very least, don’t simply rely on the bank statement summary that’s on your bank’s online portal. Either download the actual electronic bank’s statements, and keep those in a secure place, or digitize your physical documents and store them in a secure place. Either way, keeping a record of your bank statements will help protect you from fraud and scammers alike.
Additionally, there are other reasons why you may want to keep your bank statements. For example, bank statements are a great way to verify your income, should anyone ask you to do so. Storing your bank statements also helps you keep track of all of your charitable donations or business expenses. All of that information can be helpful come tax time.
Lastly, keeping all of your bank statements can also help you keep less paper files. If you’re not going to keep your bank statements, but still want to keep track of the aforementioned information, you’ll have to keep all of your bank receipts. That’s every withdrawal and deposit you’ve ever made. Even though you should keep these receipts, you can get rid of them the minute you verify that they’re on your bank statement.
That’s a whole lot less paper.
How Long to Keep Bank Statements?
You should keep your bank statement for about a year. After that, you can get rid of them if you want. If any of them contain information that you might need for a future tax season, keep those statements until those taxes have been filed and finalized.
Generally speaking, however, you only need to keep them for around a year.
What Other Financial Documents Should You Keep And For How Long?
There are a wide variety of other financial documents that you should keep as well, but for how long. The Financial Industry Regulatory Authority (FINRA) outlined how long you should keep different financial documents.
Here’s what you have to know.
Tax Documents – You should keep your tax documents for seven years. That’s primarily because the IRS can audit you up to three years after you’ve finished filing your taxes. Keeping your tax documents for seven years allows you to have all of the necessary documents to protect yourself during an audit.
Property records – If you own property, you should keep any and all documents related to the purchase. You should also keep any documents that show any significant improvements you made to your property. This will help you as you pay your property taxes or when you decide to eventually sell your property. You’ll be able to show when you made the changes and why you think your property should be valued the way you do.
Mortgages and other loans – Mortgage, student, and auto loan documents should be kept until you’ve paid off the loan. It would probably be a good idea to keep these documents for a year afterward or so, but if you don’t want to do that, keep them until you’ve paid off your loan.
Paycheck stubs – Whether you get physical copies of your pay stubs or you get digital copies, you should at least keep your pay stubs until you can verify that your W-2 form is correct. Once you have, you can get rid of your stubs as well.
Credit card receipts and statements – You only need to keep your credit card receipts and statements long enough to verify that there are no fraudulent charges. The only time you would need to keep a credit card statement longer than that is if it contained information you might need while filing your taxes. In that case, keep it with your other tax documents, and hold onto it for seven years.
Brokerage statements – Keep your quarterly statements until you get your annual statement. Make sure they all agree with one another. Once you’ve done that, keep your annual statement until your taxes have been filed.
Bills – Once your payment has cleared, you can get rid of your old bills.
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