Less is More

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Posted Wednesday, January 5, 2022 7:00 pm

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By Darcie Guerin, CFP ® First Vice President, Investments Branch Manager Raymond James

Question: With the New Year beginning, what financial documents can I get rid of and start the year out right by decluttering?

Answer: Whether it’s closets or our home offices, January is an ideal time to organize and part with things we no longer need. One of my favorite sayings is that less is more.

The past two years have seen many spending more time at home, and that may have brought piles of paperwork. Organizing your financial papers may be as satisfying and life changing as cleaning out your closets. Here are some simple ways to get started:

Just Say Goodbye

Financial paperwork often feels more important than other untidy clutter. We think it’s important to hold on to and err on the side of keeping these items rather than discarding. If anything, it may cost you time each time you go through the pile of clutter. Learn to say goodbye, shred, and move on.

Say farewell to ATM receipts after checking your bank statement. When a bill payment clears or you decide to hang onto a purchase, it’s time to part ways with statements or sales receipts, too. Unless it’s needed at tax time (keep for at least three years if used for a deduction), as proof of value for insurance in the event of loss or damage, or for a warranty, it’s probably time to get rid of it once it’s been used.

What to Keep

Here’s what you need to hang onto and for how long:

Items to Keep	When to Toss
Medical bills	Once the claim has been paid, you don’t need these any longer, unless you’re deducting the medical expense on your annual tax return. Then follow IRS guidelines for keeping these documents.
Utility bills	Typically, you could dispose of these after your bill has been paid. If you anticipate selling your home, hang onto the last years’ worth to help potential homeowners.
Documentation of major loans and insurance policies	Keep these along with all your important identification papers (birth certificates, marriage license, Social Security cards, passports, etc.) in a secure spot, such as a safe deposit box at your local bank or a firebox at home. Keep payoff statements forever.
Annual tax returns and supporting documents	Keep the most recent three years. You can be audited for up to seven by the IRS (see irs.gov for additional information).
Paystubs	Keep these until you’ve received your annual W-2 form
Property records that show improvements to your home	These can be used when selling a home to offset capital gains when the property is eventually sold. Keep until the house is put up for sale.
Bank statements	Keep these for one year.
Investment documents	Keep all capital gains tax reports for three years.

The Shredder is your Friend

Invest in a quality paper shredder or get the okay to use one at the office. Shredding is key when getting rid of old documents. If it’s going away, it needs to be shredded to prevent anyone from acquiring any personal information about you. Recycle what’s left.

For the important stuff that remains, develop an easy-to-follow filing system that you’ll use. Invest in colored folders with tabs and a label maker if you don’t already own them. Categorize, label, and keep them in a drawer or filing cabinet.

Go Digital

Going digital with your statements and paychecks can help solve a lot of problems. Almost every bank, credit card company, investment company, and employer now offer a paper-free option. Take them up on this and switch to paperless delivery.

Although opting into e-delivery helps prevent additional physical clutter, you may still have a big mess on your hands in time. This one will just be on your computer. So, make sure you employ the same thinking there as with your desk. Keep it clean and organized. Regularly go through your emails and purge the ones that are no longer relevant.

Just Do It! Start Now

Make upkeep a normal routine. Play some music to get in the mindset for firing up that shredder. The longer you wait to tackle that mess, the bigger that mountain of paper will grow.

Having your own organizing consultant can help in the undertaking. Luckily, you have one already. Talk with your financial professional about other methods of dealing with your financial clutter. Together, you can develop a strategy of what you should hang on to and what you can find joy in parting with forever. Stay focused and plan accordingly.

The opinions expressed are those of the writer as of December 22, 2021, but not necessarily those of Raymond James and Associates, and subject to change at any time. Past performance is no guarantee of future results. Material is provided for informational purposes. These views should not be construed as a recommendation for any specific sector or security. Bond prices are sensitive to changes in interest rates, and a rise in interest rates can cause a decline in their prices. Consult your tax professional and financial advisor before making any investment decisions.

“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.” This article provided by Darcie Guerin, CFP®, First Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at (239)389-1041, email darcie.guerin@raymondjames.com Website: www.raymondjames.com/Darcie.