How to Organize Your Financial Documents
Being organized with money and finances is about more than just paying bills on time and having some cash to spend.
Do you toss statements, bills and random receipts onto the dining room table or in a spare drawer where they seem to take up permanent residence?
Most people tend to fall into one of two types: pack rat or purger. Either they save too much or they toss out everything on a mission to eradicate clutter. The end result is the same — both are unable to find information when it’s needed.
Here are some ways to start getting your financial documents organized:
Create a home information centre
Choose a central location so you’re not scavenger hunting every time you need to find something. Make sure your storage spot is convenient.
Classify storage into two categories: immediate access and long-term storage. For example, you need immediate access to monthly bills, but you don’t need to look at your birth certificate every day.
For immediate access, temporary receipts, bills and statements can be kept in:
- Expandable files
- Labelled files on desktop or portable file holders
- Filing cabinet for those of you with lots of paperwork
- Some people like to use binders for papers they often refer to, but I find they are too labour intensive when you have to punch holes as well as file.
A spare drawer or filing cabinet is useful for long-term storage. Important documents such as wills and estate documents, insurance policies,
Consider keeping the originals in one safe place and copies in another.
Your goal should be to throw away as much paper as possible and keep only what you really need. Don’t waste time filing something that you should simply toss.
How long should you keep your financial documents?
Many of us become paper hoarders simply because we’re too afraid to toss anything out – what if we need that 2014 bank statement some day?
The beginning of the year is a perfect time to cull your files, toss out what’s not needed, and get all your paperwork in order.
Check this guide to see what financial documents you need to keep and for how long:
1 month – or less
- In general, keep your ATM, bank deposit and withdrawals, and credit card receipts until you reconcile them with your monthly statements (see exceptions below).
- Check your monthly bank and credit card statements for errors, then discard.
- Enter your shopping receipts into your budget spreadsheet, then discard.
- Internet, telephone and utility bills to compare rates and previous usage (unless writing off as an expense for your business in which case you’ll keep them with your tax records).
- Keep insurance policies until the new one arrives
- Income tax returns and any supporting documents, including receipts, cancelled cheques and bank statements as proof of any deductions or tax credits you have claimed.
Until paid, sold or no longer needed
- Loan documents until you pay off the loan
- Vehicle records as long as you own the vehicle.
- Certificates of title to your home and other properties.
- Annual mortgage statements and property tax and assessment notices, receipts for major home improvements or expensive household items (for insurance purposes) until the house is sold.
- Investment purchase confirmations until you sell the investment so you can establish your cost base and holding period.
- Investment records, including prospectuses and original brokerage agreement.
- Workplace benefits documents.
- Keep product receipts until the warranty has expired or you no longer own the item. If your credit card extends the warranty, keep the statement as proof of payment
- Birth, death and citizenship certificates, adoption records, marriage license, divorce decree, child custody orders
- Social insurance card
- Military discharge papers
- Workplace pension plan documents – annual statements, investments chosen
- Life insurance policies
- Wills, power of attorneys, and estate planning documents
- Inventory of safety deposit box
Consider scanning important documents and loading onto an external hard drive, flash drive, or
There are many records you don’t need to keep at all if you opt to receive e-statements for your bank accounts and investments, or if you pay your bills online with paperless billing.
Owners manuals can be found online. If you need to refer to them often put them in a separate file on your computer.
(Personally, I like to keep the paper versions. That way when I have to, say, reprogram my dishwasher – do I press the button 3 times? Press and hold for 3 seconds? Or press three buttons three times for 3 seconds? – I just whip out my manual and refer to the highlighted section whenever it misbehaves and I’m good to go in mere seconds.)
Can you legally present a scanned copy of a document instead of an original?
- Income tax documents may be in electronic format including digital images of paper documents. They must be readable and in a usable format to allow CRA auditors to process the records on CRA equipment.
- Electronic records, contracts and digital signatures can be legally used.
Documents that verify your legal identity such as a birth certificate and citizenship certificate most often need to be originals. Sometimes a notarized “certified true copy” is acceptable.
In any case, any paperwork with an original signature or a notary seal should never be discarded, even if you scan it.
More tips for staying organized
This is a good time to get your tax information sorted and filed in one place. Then when your T-slips start arriving in the coming weeks, you can toss them in your file folder until it’s time to do your taxes.
Create a home inventory that’s stored remotely. That would be a lifesaver for insurance purposes if your home was ever destroyed.
Stay safe from identity theft by shredding all documents that contain personal or financial information, before you throw them away. Use a cross-cut shredder which cuts the paper into confetti instead of strips that can be re-attached.
The bottom line
Your finances are one of the most important aspects of your life. Make it a priority to get your financial documents in order.
Whether you prefer paper copies or electronic files, find a system to organize your important paperwork that works for you, and stick with it so you can find what you need, when you need it.
Then develop a routine for when and how you will file your items and be consistent.