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I get a lot of financial snail mail that I’m not sure if I should keep or not. I’m not talking about monthly bills – almost all of those I receive and pay electronically – but monthly statements, prospectuses, agreements about and changes to my investment account, and disclosure pamphlets. I get the feeling my bank is required by law to send this info to me, but if I read each of these brochures I would be up until 2 a.m.
My area of expertise is in everyday finance, not high finance. Instead of picking up the phone and tracking down an expert for an interview, I wanted to ask the BargainBabe.com community for their opinion.
What financial snail mail do you read? What do you keep? Is it necessary to shred everything I toss?
Welcome to Bargain Babe! I’m Mara, and I’m so glad you’re here. I am an obsessive bargain hunter and penny pincher, and I am determined to live a full life without EVER paying full price.
I’m a world-class procrastinator, so always have waaaaaay too much of this kind of paper clutter lying around. I think a general rule of thumb is to eliminate your name and all personal info from anything you throw out. I cut those out and shred them. As for prospectus booklets (which can be huge), I don’t keep those, as I know I can get info from the source if needed. I do keep paid bill statements for tax purposes. I think one year is generally the suggested time period for keeping most financial info, not the 7 years it was for so many years. Of course, all of this is moot if you’re being audited!!!
For tax purposes, you need to keep your business records for up to 7 years. Most audits are within three years of the due date of the tax return (ie: 2007 can be audited until 4/15/2011). The 7 year rule is for unreported income. For financial records, I usually tell my clients to keep the monthly (or quarterly) reports until you receive the annual report and 1099s, then you can shred all the monthly. If you are handling your own stock portfolio, you need to keep your buy/sell confirmations and the 1099DIVs. If you are using a financial institution for your investments, your year end statement will have your buys & sells. Prospectus can be reviewed and then tossed. I usually review and then shred account change info and disclosure info.
If you work with a stock broker or a tax professional, they can let you know what to keep and for how long. I do tell clients to keep the actually tax returns indefinitely. They are not very thick and after a few years, you can’t request a copy from IRS. If there is a discrepancy with social security, you will need to be able to prove the income.
I shred every bit of financial information that has either my bank account number, my social security number, or my credit card number on it. I keep all that in an accordion folder. I wish there was a better way, but I haven’t heard of one! Also, I even like to keep printed copies of bills that I pay online just in case there is ever a dispute.