A huge thanks to Heather, who we recently asked to write a guest blog for Magenta.
This question often comes up with clients, friends, and relatives– so we thought it would be a great opportunity to cover the topic and expand with some top tips from a Professional Organiser.
How long should I keep my financial documents for?
As a professional organiser helping clients declutter and make the best use of space in their homes, one of the questions I am regularly asked is “How long should I keep paperwork?”
Many of us have a tendency to hold on to every bit of financial paperwork because it feels too important to discard and we worry that we might need it in the future. Privacy and security concerns mean we don’t always know how to dispose of old financial paperwork.
Over time, we collect more paperwork, and this can build up to the point that it takes up space in our home. It is frustrating and time-consuming searching through filing cabinets, boxes and piles. When we need a financial document, we need to access it quickly. Paperwork becomes outdated quickly, so we need to maintain our paperwork storage system, keeping it up to date and relevant.
Gather and sort your paperwork
Once you’ve gathered all your paperwork into one place, separate your financial paperwork from all the other types of paperwork. Non-financial paperwork such as lists, appointment letters, tickets, birthday cards, newspapers, and flyers can all be put aside as a separate organising project.
Make sorting your financial paperwork simpler and less daunting by starting off with fewer, broad categories such as Legal, Home, Personal and Business before sorting into subcategories.
Tip: make sure you have good light and have enough table or floor space to spread out your categories. Use Post-it notes to label each category.
Key financial documents and how long to keep them
If you’re unsure about a specific document, always check with a relevant professional before discarding
Personal
Bank statements – if you only receive paper bank statements, keep the most recent year’s statements in case you apply for a loan or mortgage.
Salary-related items like your payslips, P60s and P45s can be useful if you need to prove your income for tax or credit reasons. HMRC suggests keeping payslips for at least 22 months after the end of the tax year they were issued in. P60s can be useful evidence of your National Insurance contributions.
Investment statements – keep the previous year’s summary statement
Retirement and pension plans – keep these records indefinitely
Home
Mortgage policy and statements – keep for up to seven years or at least three years after you sell your home.
Rental agreements – keep until you have received your deposit back from your landlord or letting agent
Insurance documents – keep while valid until date of expiry. You may wish to keep and compare last year’s costs, terms and conditions details with your new quote. Keep original policies, but replace them with any updated versions.
Receipts – for major purchases such as car or home improvement, keep for as long as you own the item. For other minor items, keep until the returns policy and/or warranty has expired.
Utility bills – do not need to be kept for a specific length of time unless you are self-employed, need to complete a Self-Assessment tax return, or have an ongoing dispute to resolve. Keep the previous years’ worth of bills for reference if you wish.
Annual council tax bills – are a useful form of identification, so keep the most recent one.
Legal
Wills – keep indefinitely and replace with the new copy if you update your will
Loan agreements and repayment statements – keep for the duration of the agreement and keep the final payment statement for three years.
Business records
If you’re self-employed. You must keep all your financial records for at least 5 years after the 31 January submission deadline of the relevant tax year
If you run a Limited Company, you must keep records about the company itself and financial and accounting records. You must keep records for 6 years from the end of the last company financial year they relate to, or longer in certain circumstances, for example a compliance check into your Company Tax Return.
Paper client records, including invoices, must be stored securely in accordance with the European General Data Protection Regulation (GDPR) and you must destroy client information that is no longer needed.
How to dispose of paperwork
Items that contain the following information need to be shredded before disposal to protect against identity fraud:
Full names
Physical addresses
Phone numbers
Account numbers
Driver’s licence and passport numbers
Policy numbers
Usernames
Passwords
Membership information
Medical records
Signatures
Other items can go in your recycling but check your local guidelines as some items such as post-it notes can’t be recycled. Most home shredders aren’t suitable for shredding large volumes of paper – it can be time consuming, and the shredder can overheat and get jammed frequently.
Home shredding companies will supply you with confidential waste bags and collect them for shredding, although they might have a minimum number of bags they will collect. Alternatively, you can take bags to a facility yourself. Some companies such as Matthews Confidential Shredding Swansea, let you observe the shredding via a monitor.
Storage options
If you choose to keep your paperwork in a filing cabinet or box, make sure your tabs and labels are easy to read and securely attached. Create a user-friendly system for you – filing cabinets aren’t for everyone. For some people fewer categories will ensure that paperwork gets filed away, rather than trying to maintain a system with too many categories.
Tip: Organise paperwork in a visual way such as with colour coded folders, open baskets, wall mounted magazine racks or open magazine box files on shelves. This works well for some of my clients who have ADHD.
Keeping important documents safe
It may be worth investing in a small safe or lock box that is easily accessible in an emergency. This is a good option for more difficult to replace items such as passports and birth certificates.
For peace of mind, fire and waterproof document bags and concertina folder/document wallets are available from stationary suppliers and online.
Tip: Make sure family members know where your important documents are kept
Maintenance
When you add new items to a category, put them at the front to keep everything in date order. Check if the oldest one at the back can be disposed of, for example when your new home insurance papers arrive you can dispose of the old policy and papers. Carry out a maintenance declutter every once in a while, to keep the volume of paper manageable.
Tip: Get rid of the bulk by removing cardboard folders, envelopes and leaflets. Keeping only what is needed reduces the volume and makes documents easier to store and find.
It’s best to have a home shredder for ongoing paperwork maintenance and to avoid a buildup of items that need to be shredded.
A designated Action tray means you have somewhere to put your letters, bills and other items that can’t be filed away or dealt with immediately. You could try the ‘Sunday basket’ method, created by Lisa Woodruff from Organize 365.
Going Paperless is the main way of reducing the amount of financial paperwork coming into our homes. Bank accounts, utility usage and investments can all be tracked online. If you feel uncertain of changing fully over to digital, you could access your accounts online and opt out of paper statements when you feel more confident.
If you’re interested in getting support to manage your paperwork or want to find out more about my decluttering and organising services, you can head over to my website
You can also search the Association of Professional Declutterers and Organisers, APDO by speciality and location https://www.apdo.co.uk/find-an-organiser/