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How long should you keep financial paperwork for?

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How long to keep bills forThis is a question I get asked regularly, and was asked only today in fact!

I don’t know many people who don’t worry about keeping enough important paperwork, and whether they may be caught out one day needing something vital that they have thrown/shredded/recycled.

Its a minefield out there!

So here I want to give you some hints and tips as to how to deal with those bills, statements etc…. – and hopefully help you to declutter that filing cabinet once and for all!

HOWEVER I do want to say that if you ever feel uneasy or unsure about a specific document, then always seek advice from a professional before you get rid of it – better to be safe.

What ways can I reduce the amount of paperwork coming in?

Most people ask the question about how long to keep their financial paperwork because it becomes unruly in the house – barely fitting into the designated filing area (if you have one)

Why do we need to keep it at all?

We keep paperwork because we may need to refer back to something in the future.

There may be a dispute, or a query, and we may need proof of something.

Perhaps identity proof (utility bills are commonly requested for proof of address for example), or proof of purchase (bank statements for example are good for this, or the receipt itself)

The fact is, we are very wary in todays world where identity fraud is prevalent, of not keeping records of everything financial.

The issue is though, that its burdensome and can be overwhelming to manage – so you may not be able to find what you need at a given time anyway. Also, what happens if you have a house fire and all that paperwork is destroyed?

Whats the answer?

There are a few tricks that you could use to manage the amount of actual paper you have, before you even really have to worry too much about the length of time you have kept the information for, and its probably worth looking into these to ensure you don’t get overrun again once you have sorted everything out!

In todays technological world there are many ways to go.

Go online

A lot of places now prefer to use online statements as it saves money, postage fees, and hassle. If you can get your bills to be moved to this form then you have immediately cut down on the paperwork you have.

The companies would have to keep backups of all their files, including your statements, so you could always get hold of a copy if required, and you would always have a backup in case of a house fire etc…

Go digital

If a company doesn’t offer this service, or you still prefer to have a copy yourself, then why not start to scan the paper statements into your computer, and create a file on the computer for each bill.

A LOT less space is needed!

Either of these ways would help to negate the worry of keeping too few years worth of financial records, as you would have much more space on your computer out of the way.

However, there are still times when only the original hard copy will do – and thats where the time scales become crucial. You can negate paperwork to some level, but there will never be a time when we can go completely paperless (I don’t think).

So – here are the timings that I have found, and I hope that they help you too!

If you are looking after the records for the home:

How long should I keep Utility Bills for?

Up to 1 year is usually enough – some people even only have the last 3 months.

How long should I keep Bank Statements for?

For non business accounts, statements up to a year old should be plenty. This is usually enough time to be able to look back at any purchases made, or correct any mistakes.

If you get into the habit of checking statements as they come in, then you will be able to pick up on any discrepancies quite quickly and hopefully not have to worry about something from over a year ago.

How long should I keep receipts for?

Keep a receipt until:-

  • The returns policy has run out (30 days usually) – and you are happy that you are keeping the purchase
  • The warranty has run out

What about other home related paperwork?

Any important documentation related to your home or car should be kept in a secure place and for as long as you own that item.

Anything related to insurance policies should be kept until the next insurance certificate is sent to you – only have the policy documentation and the most recent certificate.

If you are asking for a mortgage, then this is usually when the most financial records and paperwork is required, and they usually ask for up to a years worth of your records, so a year is a good rule of thumb.

If you are looking after paperwork related to business or employment:

I always keep around 7 years worth of my business paperwork, which tends to be the rule of thumb for most people – the guidelines can change – so I have simply given links below to the HMRC website which has the most up to date information in detail for you.

I keep my records in large files (as large as you need to keep an entire years worth of paperwork in (A4 Leverarch is perfect for me) – and then I use tabs for each month. As I get any paperwork in I file straight away in the correct month, and then do my end of months books right at the start of the next month – printing off a summary sheet and adding it to the start of the previous month. This usually keeps things on track, and I can remember what was what so its easy to reconcile. Hope that helps!

If you are self employed:-

If you are an employee / company director:

If you have any other investments/income:

Keep any rental or other forms of income details for up to 7 years also – just to be safe!

With investments that are long term, keep for the full duration of the investment so that you have all the details you need.

Declutter as you file

Lastly – its always good to mention that once you have your paperwork and filing sorted, its definitely worth keeping things as they now are.

I suggest using a filing cabinet with tabs on for each different section (you could also colour code per person in the house to make things even more easy to find) i.e. CHRISSY – LIFE INSURANCE, CHRISSY – BANK STATEMENTS etc….

Get into the habit of putting the new filing into the front of each file, which will naturally move the older documents to the back.

When you add anything new, check whether you can get rid of whats at the back of the file – and keep the filing moving in this way to stop build up.

For example – once the new certificate comes in for your MOT, or car insurance – then the previous one is null and void so can be removed from that file immediately.

In this way you should be able to keep with pretty much the same volume of paperwork at any one time and keep things manageable.

One word of caution:-

When getting rid of ANY financial paperwork – please shred and destroy properly – you don’t want to leave important papers for the wrong hands!

In summary

Try and keep your paperwork under control and manageable at all times as its no good to you if you can’t find anything anyway.

If you are not self employed or working, and its purely home finances you are talking about, then 1 year is the maximum I would suggest keeping any paperwork for, or until any policy etc… has completed, whichever is the longer of the two.

financial paperwork how long to keepIf you are working or self employed, then check with the HMRC for up to date guidance, but most people keep between 5 and 7 years worth of records (all receipts, expenses, bills, payments etc…..)

If you can utilise paperless methods then that may be the way forward for you.

So – how long do you keep your financial records for?

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  • My guidelines are pretty much the same as yours: current year plus last year for personal, and 7 years for business. I’m still not convinced that the Taxman will accept digital documents, so I print and file all my business financial stuff, but for personal, it’s paperless all the way (or mostly…)

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