University of Connecticut

Organizing Records

Why Organize?

An important benefit of keeping orderly records is that you can document payments when required; such as to prove payment of child support, medical bills to insurance companies, or to obtain warranty coverage. Also you can document losses for fire damage or theft for insurance claims. Record keeping can help you save time and money while giving you peace of mind.

Getting Started

Designate a personal money space. Set up a safe and private area where you can conduct all of your personal financial business. This is where you will be keeping such documents as incoming bills, shopping receipts, and tax records. If you have a computer, a logical workspace will be close by, particularly if you will be using software designed to help you with money management. Information can be organized any way it makes sense to you, but keep in mind that it´s probably more manageable if you organize it by how it will be used.

Setting up a recordkeeping system includes four steps:

  1. Gather and organize financial information.
  2. Decide where each type of record should be kept, in a home file or safe-deposit box.
  3. Organize the records kept in your home file and place appropriate records in a safe-deposit box.
  4. Review and discard unneeded records.

Step 1: Organize Financial Information

Organizing important personal information will make money management easier for you and for others who may be responsible for handling your financial affairs. When you organize financial papers, the first step is to locate all of the documents and related information such as phone and account numbers. Gather information in the categories such as:

  • loan related documents – promissory notes, disclosure statements, notifications of lender change, repayment schedules, lender correspondence, income tax returns
  • personal papers – birth, marriage and death certificates, divorce decrees, adoption papers, passports, citizenship papers, military service records
  • automobile and other titles
  • certificates of deposit or bank savings certificates
  • list of insurance policies and their numbers
  • property records, title and deeds
  • records of home improvements
  • legal papers, leases and contracts
  • copy of household goods inventory with photos or video
  • names and addresses of your financial advisors and financial institutions
  • copy of financial plans, net worth statements
  • list of checking and savings accounts by financial institution
  • papers pertaining to valuable property such as jewelry, silverware

Step 2: Decide Where to Store Your Financial Records

Financial records can be kept either in a home file or in a safe-deposit box at a financial institution. Active records and those of limited value can be kept in a home file. Consider using a safe-deposit box to store records that would be difficult to replace. These records should be reviewed annually and when there are major changes such as marriage, divorce, or death of family member.

Step 3: Organize and Store Records Kept at Home

Select a convenient place such as in the kitchen or home office area to keep important household financial documents. A file cabinet that is fire and water resistant makes good sense. Or you can simply use an inexpensive cardboard box that holds file folders. Keep it handy, where it can be accessed easily, probably not on the top shelf of the closet. Store duplicates of important household papers in a safe place outside of your home.

At least one other person should know where all important records are kept and how they are organized, so that in an emergency that person can locate information quickly. A logical place to keep this information would be at the front of the active files. The information should include a list of items in the safe-deposit box and where the key is located.

Benefits of Electronic Organization

Organizing electronically is a great option. You can scan in all of your paper documents, and save copies of all of your electronic statements and receipts. Keep your files on your hard drive (remember to make regular backups and password protect the information), or, if you’re sure it’s secure, store the documents online. By organizing documents on a computer instead of in paper files, you can save a lot of space in a crowded filing cabinet. Remember to keep hard copies of records such as birth certificates and passports.

Step 4: Review and Discard Unneeded Records

You will accumulate many financial papers over time so it is important to know what and how long to keep them. You can also separate papers into active and inactive files.

  • Personal records that provide documentation of events such as birth, marriage, divorce, death, military service, adoption, naturalization, and medical records should be kept permanently.
  • Tax records such as federal and state income taxes, gift, and estate tax returns should be kept at least six years. The IRS has three years from the time of filing to assess additional taxes. The time period can be extended however, if you substantially underreported income or for a fraudulent return. Some financial advisors suggest that you keep a copy of your tax returns with documentation for at least 10 years. For tax purposes, papers documenting home purchase and improvements should be kept as long as you own the property or are rolling over profits into new property.
  • Housing and investment records such as titles, deeds, trust agreements, wills, retirement plan agreements, and power of attorney documents should be kept as long as the agreements are in effect. Investment purchase and sale records should be kept for 6 years after the tax deadline for the year of sale.
  • Consumer purchase records, such as receipts and warranties for major purchases should be kept as long as you own the item or until the warranty expires.

Only Keep What is Necessary

For additional information on what should be kept and for how long, try these sites:

Disclaimer: Nothing on this website should be construed as authoritative financial advice. Your circumstances are unique and you may want to consult a financial advisor. The authors of this website are not financial planners.