How long should I save my financial records?

How long should I save my fianancial records? As a professional organizer I get this question a lot. This is one of the top questions asked by most of my clients. I suggest to go through all your paperwork weekly or bi-weekly. Once you get the hang of scheduling this task and marking it in your calendar, it isn’t so grueling.  Trust me, you will be happy you did because it keeps the chaos and stress at bay. There is nothing like trying to find the things you need in the pile of paperwork you don’t need to see anymore.

Begin each year with new folders in your filing cabinet and store last years paperwork away. One reason we save financial paperwork is for our yearly or quarterly taxes, but another reason we keep financial records is to discuss any kind of dispute over a certain purchase or insurance claim. You can have a monthly statement and all the details in hand,  with the popularity of electronic statements and paying bills online, this information can be retrieved easily.  If you are considering transitioning to a paperless system in your office then I suggest you back up your data as many ways as you can afford.

To start, make sure you have a reliable computer; does your computer have enough space to save a lot of data? Purchase an external drive to save your info and make frequent back ups.  Back up your information in as many forms as you can manage. For example; back up on a disk, an external drive and on an off-site server. Depending on the kind of work you do it isn’t extreme to back up nightly. You can schedule these back ups with your computer and server. Once you set this system up, it will be easier. If this sounds too daunting, find a reliable computer “guy” “gal’ to help you with this.  Now that you have room and the system in place use a scanner and create a pdf of anything you’d like to keep.

The goal is to use as little paper as possible and to continue backing up with as many sources as you can manage. At best, the most you will keep will be the seven years of financial records in case of an audit. Go to the website; bankrate and look at their table for more detailed information. The info they provide is for the general public and will not entirely apply to the self-employed or businesses. But it is a good place to start before meeting with an accountant.

At the end of each year save those disks in the permanent storage, and pat yourself on the back for a job well done!