Blog - Spring Cleaning for Records and Documents

Andrew Gipner
Lead Financial Planner

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Warm and sunny days, the start of baseball (Go Tigers!), and pollen are here. It’s spring time for most of the country as well as the starting point of many projects. For me, my project is to finally organize and get  rid of a majority of items in a local storage closet. As for my wife, she is in the beginning stages of organizing her mementos to re-start her hobby of scrapbooking. As you see, organization is the foundation of each of these projects. While the definition of organization is different for everyone, I think the satisfaction of it is the same.

So, what about your financial and personal records? With tax season over, this is the opportune time to review and take care of organizing these types of items. Below are a just a few ideas to consider when you are focusing on this area of your spring cleaning.

What Documents Should I Keep?

Here at Longview, we are often asked by our clients which documents are necessary to retain as well as which documents are worth shredding.  While all documents and situations are different for everyone, here is a short list to consider:

  • Tax Documents – While the IRS has three years to challenge any item on a tax return, it has up to six years to challenge the reported income which you received. Simply put, hold on to your 1040’s and any supporting documents for at least 7 years.  If you are interested in more specific information for a particular tax document or situation, the IRS has a nice summary page here.
  • Bank Statements – In most cases, holding on to these for more than one year is not necessary. Additionally, many banks will retain your statements electronically through your online access for this timeframe. That said, if you are comfortable with shredding the documents received via mail immediately, go ahead and do so. Just know that at tax time next year you may have to re-print certain statements.
  • Retirement and Investment Account Statements – Hold on to your monthly statements for one year and keep your annual statement indefinitely if the monthly documents align with the annual document. Additionally, any account documents that are related to contributions you make to retirement accounts or related to taxable investment transactions should be held along with your other tax information.

As mentioned, these are general guidelines. If in doubt, gauge your personal level of comfort or feel free to contact us and we can provide you with a quick answer.

Consider Online Storage

This year, it was a personal goal of mine to go paperless with everything I receive (bills, statements, etc.).  Other than the occasional restaurant coupons, my mailbox is empty and I personally love it. That said, going paperless is not for everyone. But, if you are thinking about it, be sure that all of your monthly statements and important documents are saved to your computer and backed up with a program such as Carbonite or directly saved to other online storage platforms such as DropBox. Also, for extra security, be sure that access to your sensitive documents is encrypted with a password that is different from any other password you currently have.

If you are indeed considering any of these suggestions, I encourage you to research all providers thoroughly and know that the price and services vary between companies.

Change Your Passwords

While some of my online access requires me to change my password every 60 days, the others are begrudgingly changed every April.  Yes, it can be very frustrating – especially when I forget the certain order and characteristics of my new password and inevitably get the security question wrong due to me forgetting what I entered for my first car’s make and model (was it an ‘89 Trooper or a 1989 Isuzu Trooper?).  That said, there is a simple solution that is one-step beyond changing the password – create an encrypted Excel spreadsheet, backed up via online storage, with all your passwords and security questions. Alternatively, you may consider using online password manager software (LastPass is my personal favorite).  Finally, always remember that the word “password” is never a good password.

I hope that you find these few considerations helpful if you do indeed decide to take on a spring cleaning and organization of your personal and financial records. As with any project, I am sure the satisfaction of completion will be well worth it in the end!


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