financial paperwork

A Guide to Spring Cleaning Your Financial Paperwork

If the spring-cleaning bug has bit you, you won’t stop at just washing your windows and cleaning under the fridge. Your job isn’t done until you can bring order to all areas of your life, including your financial house.

Even though online banking makes it possible to manage money virtually, the average person still collects a lot of snail mail over the year.

While throwing all that paperwork out may be tempting, this idea could cause problems in the future. You’re meant to keep certain financial documents — look below to see how long.

Personal Loan Contracts

Any time you borrow a personal loan or line of credit, you have to sign a loan agreement. This contract contains all the black-and-white details of your account, so you know what to expect when borrowing a line of credit or personal loan. Most importantly, it outlines your terms, payment schedule, and cost of borrowing.

While some traditional loans may mail you a paper contract, online lenders might send you an e-document. You should keep it in a safe place — whether it’s paper or digital. It should join any supporting documents or proof of payments for at least the lifetime of the loan.

Bills

You can safely get rid of phone and utility bills after one month. After all, most utility providers set you up with an online account where you can review digital copies of these bills.

The only exception is if you plan on using any of these bills for tax-related purposes. In that case, refer to the section on taxes for how long you should keep them.

Financial Statements

If our bank, credit card company, or lender still mails your monthly statements, financial advisors recommend you keep them for 12 months. Once again, you might have to keep them longer if you plan on using them as supporting tax documents.

Receipts

Do you always say “yes” when the cashier asks if you want your receipt? Your wallet is probably bursting with receipts collected over the year.

The good news is that you can safely clear out most of them. There are only three times you should file away your receipts for safekeeping.

  1. It’s for a major purchase, like a new appliance, vehicle, or device. You may need to show this in case you need to return it or activate its warranty.
  2. It’s for household services or work done to your house, including renovations and repairs.
  3. You made a purchase you plan on writing off.

Insurance Documents

You should keep your auto, health, and life insurance documents until your policy expires, or you purchase a new package.

Taxes

Tax time is stressful enough without having to fight against disorganized and missing paperwork, so pay particular attention to your returns this spring.

According to the Canadian Revenue Agency (CRA), you should keep your supporting documents for six years. However, some advisors recommend you keep all your tax documents indefinitely in case of errors. You should also retain copies of your returns, notices of assessment, and notices of reassessment.

Handle Your Finances with Care

Once you go through all your paperwork, you’ll be left with two piles: the paperwork to keep and discard. When it comes to the stuff you want to toss, make sure you shred it first so that no personal information may be exposed. As for the stuff you want to keep, look for a filing system that works for you. Choose a safe, dry place where you won’t lose things.

Christophe Rude
Christophe Rude
Articles: 15875