Is your home or office cluttered with financial documents you no longer need? If so, you’re not alone. Many people hang onto old bills, receipts, and other financial papers far longer than they need to. But hanging onto too much paper can be a real drag on your productivity and peace of mind. That’s why it’s vital to declutter your financial documents regularly. Here are some tips to help you get started.
Why It’s Important To Declutter Paperwork
It’s easy to accumulate clutter, from old bills to receipts for things you no longer own. But if you limit yourself to only keeping what is required by law and what you need for your records, you can clear up a lot of unnecessary stuff that otherwise might take up space. Not only will this help reduce clutter in the home or office, but it can also help simplify the filing process if you need to reference something later. An organized space helps lighten the mental load by eliminating items that don’t serve a purpose—knowing where everything is and only having essential items can make life easier and more efficient.
Keep Only What Is Required By Law
You must be selective in what you keep or throw away when keeping physical documents. When you decide on what records to keep or toss, ask if you are obligated to hold the paperwork due to a law or regulation that requires it.
Documents To Keep For One Year
- Bank Statements
- Paycheck Stubs (reconcile with W-2)
- Canceled checks
- Monthly and quarterly mutual fund and retirement contribution statements (reconcile with year-end report)
Papers To Keep For Three Years
- Credit Card Statements
- Medical Bills (in case of insurance disputes)
- Utility Records
- Expired Insurance Policies
Records To Keep For Six Years
The six-year law is a set of federal regulations requiring taxpayers to maintain documents related to their filing from the preceding three years. While this helps maintain compliance and avoid red flags, it’s important not to assume that following basic guidelines will protect you from an audit.
Here is what should you need to keep:
- Supporting Documents For Tax Returns
- Accident Reports and Claims
- Medical Bills (if tax-related)
- Property Records / Improvement Receipts
- Sales Receipts
- Wage Garnishments
- Other Tax-Related Bills
What To Keep Forever
The following documents you should never shred:
- Investment Trade Confirmations
- Retirement and Pension Records
- Birth Certificates
- Valid Travel Documents
- Deeds
- Legal Records, Correspondence, and Other Important Matters
Shred Everything Else
Shredding personal documents is one of the most effective ways to secure your information. When a document no longer serves a purpose, shred it instead of just throwing it away to ensure that no one can access confidential information about you or your family.
Create A System For Organizing Your Documents
Creating a system for organizing documents may seem like a tedious and challenging task, but it can significantly benefit your workflow. Clearly labeling and sorting documents into distinct folders allows you to quickly reference them whenever you need, saving precious time that could be better spent on other, more critical tasks. For maximum efficiency, consider using separate folders for each project and taking the additional step of categorizing files within each project folder with subfolders. This may also mean creating an archive folder where outdated documents can be kept on hand without clogging up the current projects with unnecessary clutter. With a little effort in setting up your system, it will be much easier to locate documents and stay organized.
Getting control of your paper clutter will create more space in your home and help you feel less overwhelmed. The key is to identify what you need to keep, let go of the rest, and create a system for organizing what’s left.
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