Paper is a pain, and managing a home filing system can be a drag, but some documents you really need to hang onto because you never know when you'll need them. Here's a primer on how long to keep documents and when you're done with them, which ones you need to shred. This should serve as a quick reference guide for creating and maintaining a workable home filing system.
First, think about cutting down on the amount of paper you receive and you'll end up having to shred or file less.
This means getting rid of junk mail, signing up for e-bills and not accepting flyers, coupons you'll never use, or other ephemera you feel like you need to hang on to when you know you really don't.
If you're really struggling with paper clutter to the point where you feel like you may be hoarding it, reach out to professional who can guide you through the decluttering process.
The second step is to make sure you have a good mail management system in place. The more efficiently you handle the mail you do have coming in, the less often you'll have to do a big filing/shredding/recycling session.
Set Up An Electronic Filing System
Getting rid of your paper filing by setting up an electronic filing system will save you space and rid you of paper clutter. That’s a win. Nowadays, electronic filing system makes a lot of sense. To get started, you need a scanner and a place to store your files, a folder system on a computer or in the cloud, and an external hard drive.
Set up general folders for different types of documents (examples: household, taxes, auto, birth certificates, etc.) You don’t need to get too precise with storing document since electronic filing systems are searchable.
Then, scan each document and store in a folder according the contents.
Keeping Copies of Important Documents
For your super important documents, experts advise keeping copies.
That may mean keeping one copy in your cloud storage and another on a hard drive. It could also mean keeping one copy in your electronic filing and one hard copy in a fireproof safe.
Store These Documents Forever
These documents should be stored forever:
Academic Records - Diplomas, transcripts and any portfolio work that may be used in the future when applying for a job.
Death Certificates - May be needed for tax purposes.
Employment Records - Any clauses, agreements, disciplinary files and performance reviews.
Retirement and Pension Records
Social Security Cards
Save For a Shorter Period of Time
These documents you may touch as often as monthly or weekly:
Bank Statements - 1 month
Bills - 1 year for anything tax or warranty related, all other bills should be shred as soon as they have been paid.
Credit Card Bills - Shred immediately when paid.
Home Improvement Receipts - Keep until home is sold.
Investment Records - 7 years after you've closed the account or sold the security.
Leases - Keep until you've moved out and have received your deposit back from the landlord.
Paychecks / Pay Stubs - 1 year until you've received your W-2
Sales Receipts - Keep for the life of the warranty. Obviously, this applies only to major purchases like appliances and electronics. I typically keep receipts for things like groceries and clothing only as long as I know I am not going to need the receipt for a return.
Tax Documents - 7 years including your filing and all accompanying documents like W-2s and receipts.
Vehicle Records - Keep until boat, car or motorcycle is sold.
How to Get Rid of Documents
Shredding documents is the main way to protect yourself from identity theft. (Read my interview with security expert Jay Foley on How to Protect Yourself From Identity Theft). Wondering what to shred? The general rule is anything with the following information should be shred: account numbers, birth dates, maiden names, passwords and pins, signatures, and social security numbers.
Again, those are no-brainers.
Here are the basics:
If documents are still "active" i.e., you need to hold onto them for reference and establish a simple home filing system. This means filing documents by topic and then shredding them once they are no longer in use.
What Documents to Shred
If you're done with these documents and no longer need them, here's what to shred (everything else --like paperwork--you can just recycle).
Birth certificate copies
Canceled and voided checks
Credit card bills
Driver’s licenses (expired)
Employment documents that have any identifying
Expired passports and visas
Investments account #s
Investment, stock and property transactions
Items with a signature (leases, contracts, letters)
Medical and dental records
Papers with a Social Security number
Passwords or PIN numbers
Pre-approved credit card applications
Receipts with checking account numbers, credit card numbers or any other identifying information
Transcripts with identifying information on them
Used airline tickets
Utility bills (telephone, gas, electric, water, cable TV, Internet)
Make sure to have a flexible filing system set up to keep these documents in check and shred them when they are no longer necessary.
Anything you plan to keep needs to be actioned, organized and filed. I like my home filing system.