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Why should I keep personal financial records?

Why should I keep personal financial records?

Why do I need to keep personal accounting records?

Keeping documents and financial records is one of the inevitable chores that come with being an adult. You probably already have a place where you store your passport and Social Security card. But did you know that there are numerous other documents and records that you need to store for various periods of time? Whenever you receive a bank statement, a new insurance policy or any other type of document or record, it’s important to evaluate whether you might need the record in the future and if it’s the only place you can find the information, then decide what to keep. It’s a great idea to keep all of your documents and records neatly organized in one place, so when you need your passport for a trip or your utility bills to prove your place of residence, you don’t need to spend hours wading through boxes of documents.

What documents and records should I keep?

If you have a tendency to keep too many documents and records at home, it can be useful to ask yourself “What do I need this for?” when you get another bank statement or record. As a rule, documents that are difficult to obtain, such as your proof of identity, should be kept. Records that are easy to obtain, such as your bank statements that you can easily download online and print out in just a few minutes, are not necessary to keep. That being said, you should always store your identity and insurance documents, tax returns and contracts in a safe, easily accessible location.

How long should I keep my financial records?

Keeping your financial records and documents is important, but it’s also crucial to know how long you need to keep them for. For instance, things like receipts only need to be kept for a few weeks or months until you’ve had the chance to double-check your bank statement and make sure that the transaction was processed accurately. The next category includes things that should be kept for a year or less. This includes insurance policies, which should be kept as long as they are valid or until you receive a new policy document, utility bills and bank statements. Things that should be kept for several years and sometimes decades include mortgage contracts, tax returns, investment statements, property appraisals and receipts for significant and expensive purchases. Finally, you should keep your Social Security card, passport, birth and marriage certificate and similar documents for the duration of your life.