Spring Cleaning Your Finances: What to Keep and What to Shred
There’s no better way to celebrate the end of tax season and the beginning of warmer weather than Spring cleaning your finances, according to Senior CFP Board Ambassador Jill Schlesinger, CFP®.
While this can be a daunting process, Schlesinger shares a list of best practices to keep in mind when getting your financial house in order on LetsMakeaPlan.org:
- Shred it & Forget it (After 45 Days): Unless you need to reference a transaction for tax or business purposes, or for proof of purchase for a specific item, you can shred credit card statements after 45 days. But, be sure to hold on to statements you may need for your taxes, such as charitable contributions. Same rule applies for utility and phone bills: once you’ve paid them feel free to shred, unless they contain tax-deductible expenses.
- Short Term Relationship (About 1 Year): Hold on to bank and investment statements for a year, and be sure to flag any taxable investments. However, hold on to records that are related to home improvements and major purchases until you dispose of the asset. Similarly, you should hold on to medical records for at least a year.
- Lucky Number 7: Because the IRS has seven years to audit your returns if the agency suspects you made a mistake, it’s recommended to keep your returns, and all supporting documents, for seven years. If you work with a tax preparer, ask whether they will maintain electronic copies of all returns filed.
- Declutter for the Win: If you have any orphan accounts, consider consolidating them – same for old retirement or investment accounts. Combining accounts streamlines your financial life, makes it easier to monitor your entire portfolio and ensures that your money is properly diversified.
A CERTIFIED FINANCIAL PLANNER™ professional can help Americans determine which documents are important to keep for future reference and how to consolidate accounts.
Certified Financial Planner Board of Standards, Inc. is the professional body for personal financial planners in the U.S. CFP Board sets standards for financial planning and administers the prestigious CFP® certification – one of the most respected certifications in financial services – so that the public has access to and benefits from competent and ethical financial planning. CFP Board, along with its Center for Financial Planning, is committed to increasing the public’s awareness of CFP® certification and access to a diverse, ethical and competent financial planning workforce. Widely recognized by firms and consumer groups as the standard for financial planning, CFP® certification is held by more than 83,000 people in the United States.
Dan Drummond, Director of Communications