taking stock

Establishing a Digital or Paper Trail

Organizing your financial records is another key to effective money management. This makes it easier to pay bills on time and find documents when you need them. It also comes in handy at tax time. How long does it make sense to keep paperwork?

1. All records should be kept at least five years.
2. It isn’t necessary to keep anything other than your tax records.
3. It depends on the type of record involved.

“C” is correct. Permanently keep important records like those that show your home purchase or improvements, IRA contributions, and sales receipts for major assets (cars, computers, appliances, etc.). Keep tax returns for seven years and paycheck stubs for one. You can shred bill statements, such as for utilities or credit cards, as soon as you’ve reviewed and paid them, but keep a copy of your canceled check for proof of payment.