Spring Cleaning of your Financial Records

Apr 2019


At times it may not feel like it outside, but it is spring which means it’s not a bad idea to do some spring cleaning of your financial records. I know some people save every bill they ever received. Why someone thinks they’ll ever need their electric bill from 1995 is beyond me. In addition, let’s face facts – the more stuff you save the more difficult it is to find something if you actually need it. Therefore, since most of you have filed your tax returns, this is a perfect time of year to prune some of your financial records.

When it comes to taxes, at a minimum, you need to save your tax information for at least three years. The reason for that is that the IRS typically has three years to audit your tax returns. Therefore, if you filed your 2015 tax return by April 15, 2016, it means that the IRS has until April 15 of this year to audit you for 2015. The exception is if you severely unreported your income where they can go back seven years, or if there is fraud then they can go back indefinitely. My general advice for people is that I would save my return and backup information for seven years and dispose any of the previous years’ tax information other than the return. I know people who have their tax information since the 70s and there’s no reason to do that. Get rid of it; all it does is add to your clutter.

How long should you save monthly recurring bills such as your cable or utility bills? For many people they don’t have to save those at all, after all, you can go online for those. However, if that’s not your cup of tea, my recommendation is that you save just the last month’s bill. Once you get the current bill and inspect it for accuracy, you can dispose of the last month’s bill. I also don’t have a problem if you dispose of the bill as soon as you pay it. After all, if you ever needed it you could always get if from the company.

Every year when I renew my auto and homeowner’s policy I get a brand new policy. At that point in time I dispose of my old policies. As far as I’m concerned there’s no reason to save old policies as all they do is take up space.

There are people who save every warranty for every item they ever purchased. It is important that if you own the item and the warranty is still in effect that you do save that item; however, why would you need your warranty for a refrigerator you purchased 30 years ago and you got rid of 10 years ago. There is no reason. Once again, all it does is add clutter and we all have too much of that.

One last note and that is when you dispose of items that may contain sensitive information like your charge card bills or backup tax information, it is important not to just throw them in the trash; those you should shred. It would be much easier if you could just throw it is in the trash; however, we all know life is not that easy. Therefore, if you don’t have a shredder, buy one; it’s one of the best investments you can make.

For those of you who have lots of stuff to dispose of you may want to look for one of those free shredding days offered by many cities. For example the BBB is having a free shredding event on May 18th. For more information contact them at 248-799-0305.

Good luck!



Rick is a fee-only financial advisor.  If you would like Rick to respond to your questions, please email Rick at rick@bloomassetmanagement.com.