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HOW LONG SHOULD YOU KEEP FINANCIAL PAPERWORK FOR?

WRITTEN by CHRISSY 

& FILED IN Home Info

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Do you struggle with knowing how long to keep your important financial paperwork for?

It’s definitely tricky to know for sure whether we can throw things away, but with the ever increasing mountain of paperwork in our homes it’s important to get to grips with it as soon as possible.

That’s why I’ve put together this post which should help you make those all important decisions.

Whether you want to know about home paperwork or business, what to keep and what you never needed to keep – there is information to help – so let’s get going, shall we…

How long to keep financial paperwork for - tips

I don’t know many people who don’t worry about keeping enough important paperwork, and whether they may be caught out one day needing something vital that they have thrown/shredded/recycled.

It really is a minefield out there!

So if you want to declutter that filing cabinet once and for all – read on!

PLEASE NOTE – I do want to say that if you EVER feel uneasy or unsure about a specific document, then always seek advice from a professional before you get rid of it – better to be safe than sorry…

Now – I’m a girl who wants to tackle things from the start – and as such I can’t write a post about what to keep without first starting at why you need to keep it in the first place.

So I wanted to take a few seconds first to look at what sort of things are coming into your home, and how you could reduce this from now on. This, after all, will ease the amount of papers in the future, so it will be easier to manage.

HOW CAN I REDUCE THE AMOUNT OF PAPERWORK COMING IN?

Most people ask the question about how long to keep their financial paperwork because it becomes unruly in the house – barely fitting into the designated filing area (if you have one) – but the first question to really ask is…

WHY DO WE NEED TO KEEP IT AT ALL?

Here are some of the main reasons we keep our financial paperwork: –

  • We may need to refer back to it in the future
  • We need to keep track of our spending / saving
  • There may be a dispute that we need to query
  • For proof of purchase (bank statement / credit card statement / receipt)
  • Identity proof (utility bills are commonly requested for proof of address for example)

The fact is, we are very wary in todays world where identity fraud is prevalent, of not keeping records of everything financial.

The issue though, is that it can be a real burden and overwhelming to manage – so you may not be able to find what you need at a given time anyway.

Also, what happens if you have a house fire and all that paperwork is destroyed?

WHAT’S THE ANSWER?

There are a few tricks that you could use to manage the amount of actual paper you have, before you even really have to worry too much about the length of time you have kept the information for, and it’s worth looking into these to ensure you don’t get overrun again once you have sorted everything out!

In todays technological world there are many ways to go: –

GO ONLINE

A lot of places now prefer to use online statements as it saves money, postage fees, and hassle. If you can get your bills to be moved online completely then you have immediately cut down on the paperwork you have.

The companies would have to keep backups of all their files, including your statements, so you could always get hold of a copy if required, and you would always have a backup in case of a house fire etc…

GO DIGITAL

If a company doesn’t offer this service, or you still prefer to have a copy yourself, then why not start to scan the paper statements into your computer, and create a file on the computer for each bill.

A LOT less space is needed!

Either of these ways would help to negate the worry of keeping too few years worth of financial records, as you would have much space on your computer to store more.

These are great tips to avoid the paperwork mountain building – but of course there are still times when only the original hard copy will do – and that’s where the time scales become crucial.

You can negate paperwork to some level, but there will never be a time when we can go completely paperless (I don’t think).

So – let’s look at the timings that paperwork should be kept until  – shall we…

  • UTILITY BILLS – up to 1 year is usually enough – some people even only have the last 3 months
  • BANK STATEMENTS – For non business accounts, a years worth should be plenty. This is usually enough time to be able to look back at any purchase made, or correct any errors
  • RECEIPTS – Keep until the returns policy has run out (usually 30 days), and you are happy with the purchase. If it is a high priced item with a warranty then keep until the warranty has run out also.
  • BIG TICKET ITEMS RELATED TO HOME / CAR – Keep for as long as you own the item.
  • CERTIFICATIONS AND POLICIES – Keep until the next one reaches you – then the previous one is no longer valid.
TIP – Get into the habit of checking your statements as soon as they come in, then you will be able to pick up any discrepancies quickly. Once you have checked and everything is OK – then you can decide whether to keep it or shred and recycle it.

I always keep around 7 years worth of my business paperwork, which tends to be the rule of thumb for most people – the guidelines can change – so I have simply given links below to the HMRC website which has the most up to date information in detail for you.

I keep my records in large files (as large as you need to keep an entire years worth of paperwork in (A4 Lever Arch files** or accordion files** are perfect for me) – and then I use tabs for each month. As I get any paperwork in I file straight away in the correct month, and then do my end of months books right at the start of the next month – printing off a summary sheet and adding it to the start of the previous month. This usually keeps things on track, and I can remember what was what so it’s easy to reconcile.

If you are self employed:-

http://www.hmrc.gov.uk/sa/rec-keep-self-emp.htm#5

If you are an employee / company director:

http://www.hmrc.gov.uk/sa/record-keeping.htm#3

If you have any other investments/income:

Keep any rental or other forms of income details for up to 7 years also – just to be safe!

With investments that are long term, keep for the full duration of the investment so that you have all the details you need.

DECLUTTER AS YOU FILE…

Lastly – its always good to mention that once you have your paperwork sorted and know what you need to keep, it’s definitely worth having a sort out of your filing so that you can start afresh from today onwards.

I suggest using a filing cabinet with tabs on for each different section (you could also colour code per person in the house to make things even more easy to find) i.e. CHRISSY – LIFE INSURANCE, CHRISSY – BANK STATEMENTS etc….

Get into the habit of putting the new filing into the front of each file, which will naturally move the older documents to the back.

When you add anything new, check whether you can get rid of what’s at the back of the file – and keep the filing moving in this way to stop build up.

For example – once the new certificate comes in for your MOT, or car insurance – then the previous one is null and void so can be removed from that file immediately.

In this way you should be able to keep with pretty much the same volume of paperwork at any one time and keep things manageable.

One word of caution:- When getting rid of ANY financial paperwork – please shred and destroy properly – you don’t want to leave important papers for the wrong hands!
How long should you keep financial paperwork for, and what papers should you keep? - tips to help work things out once and for all.

Try and keep your paperwork under control and manageable at all times as it’s no good to you if you can’t find anything anyway.

If you are not self employed or working, and it’s purely home finances you are talking about, then 1 year is the maximum I would suggest keeping any paperwork for, or until any policy etc… has completed, whichever is the longer of the two.

If you are working or self employed, then check with the HMRC for up to date guidance, but most people keep between 5 and 7 years worth of records (all receipts, expenses, bills, payments etc…..)

If you can utilise paperless methods then that may be the way forward for you.

So – how long do you keep your financial records for?…

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