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How I Organize My Financial Records (And Why You Should)

You may never need to go back and see how much you spent on gas in March, 2006. But what if you did? Organizing your bank statements, receipts, and tax returns can save you headaches down the road. Here are a few reasons you should organize your financial documents, and the ways I get it done.

Why Organize Financial Records?

Not only can you be a better financial planner with an organized archive of your financial documents, there a few times in life you might need those records.

If you’re not sure how long you might need to hang onto a bit of financial info, consider three years to be the minimum.

Tax Audits – Even if you cross your Ts on your tax returns, the taxman can come knocking. IRS auditors may ask to see up tax returns for the previous three years, plus supporting documentation.

Loans – When you apply for a mortgage, and occasionally other kinds of larger loans, lenders may ask for proof of your income and/or bank and investment account balances. Often, they may want to see more than just your more recent tax return. This shows lenders whether your income is steady, as windfalls such as bonuses, inheritances, or winnings might inflate a single year tax return.

Financial Aid – Applying for college financial aid often requires at least two years of tax returns and account balances.

How I Organize Financial Records

Though I am keeping more and more of my financial records electronically, I still keep hard copies of any tax-related documentation, including payment stubs for excise and property taxes. I also hang onto receipts for major purchases, warranties, auto maintenance, etc.

To organize my physical papers, I use thin folders or loose-leaf binders filled with clear plastic sheet protectors, one per document. I then label the front of each “tax returns 2001 – 2008”, “auto expenses”, etc.

The rest of my financial records are kept electronically. This includes bank statements, cleared checks, and credit card and loan statements. Every January, I export all of my statements as .CSV (comma separated value) files, which all of my banking sites allow me to do. I then drop them into designated excel worksheets, divided by account. In each file is a separate tab for each year. Finally, I burn the files to a CD and place it in a fire proof box.

And that’s it!

One thing I’m also experimenting with is the new service Shoeboxed, which scans any receipts that you mail to them (for a modest monthly fee). With their help, it’s possible my financial records will be 100 percent electronic within a year or two.

How do you organize your financial documents?

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

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    Dan Englander
    Shoeboxed.com

  2. I scanned in every single one of my financial documents and I only keep the ones I HAVE to keep in a hard copy.

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