Do Your Financial Documents Spark Joy?

Thanks to Marie Kondo’s decluttering philosophy, I am not able to look at anything without thinking “But does it spark joy?” Although financial documents and records may not spark joy, here are some tips to determine what should be kept.  First and foremost, if you haven’t already opted to go paperless, consider it and lessen those piles of receipts, bills, paystubs and statements.

Tax Documents – Keep tax related records for at least 7 years, including all backup for items you claim as deductions, including cancelled checks and receipts.

Property Records – Keep documents related to the purchase of your home and substantial improvement records for at least 6 years after you sell the home.

Loans – Keep documents related to mortgages and other types of loans like student loans or auto loans until paid off.  It is wise to keep payoff documents indefinitely.

Bank Records – This one may depend on your situation.  It’s a good idea to keep check copies related to taxes, business expenses, home improvements and mortgage payments.

Paycheck Stubs – Keep until you verify paystubs match up with the annual W2 from employer.

Credit Card Receipts and Statements Keep until you verify receipts against the monthly statement.  Keep receipts used for a tax deduction for at least 7 years.

Brokerage Statements – It’s a good idea to keep quarterly brokerage statements until you receive the annual summary to make sure they match up.  It’s also wise to keep records of purchases and sales of securities in case you need to prove capital gains and losses at tax time.

Bills – In most cases, you only need to keep until you confirm payment.