What To Do With Your Financial Documents


When your credit card bills come in the mail, do you take a quick glance and then throw them on top of the big pile of papers on your desk? If so, you’re not alone, but you could really use a better method for organizing and storing them. We all know that it’s beneficial to read and understand financial documents and bank statements. What we don’t always know is what to do with them afterward. So how exactly should you sort and store them to provide the most ease and usefulness later on?

Short of hiring a superhero to protect your financial documents, there are some straightforward actions you can take to ensure that your personal information is protected. The underlying principle is to stay abreast of what you need to keep, what you already have on file, and when to throw things out. Here are some tips that will help you to organize and safe-guard your documents:

How to Organize Your Paper Documents

Before you carefully store your documents (see below), you’ll need to organize them and make sure any action items are taken care of. You can sort them according to a simple filing system using labeled folders with names like these:

  • Bills to be paid
  • Receipts/Proof of purchase
  • Things to file
  • For shredding

For documents that are ready to be stored, you can use a filing system based on each individual account. For example, you might use folders with labels for each account name:

  • Capital One Credit Card
  • Sallie Mae Student Loan
  • Bank of America Mortgage
  • Credit Union Checking Account

Since there are many ways you can organize your files, you should play around with different techniques, but use the one that seems to work best for you. The most crucial aspect of organizing your documents, of course, is making sure no bills or “high priority” documents slip through the cracks. If you have a hard time remembering your payment dates, you can keep a checklist posted to help remind you.

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How to Store Your Documents

Detailed financial documents provide valuable information about our finances and the potentially sensitive information makes it necessary to keep financial docs safe from anyone who might use the information to steal your identity or tamper with your bank account. If you stay in control of your documents you’ll have the power to organize and regularly maintain them, while avoiding identity theft or fraud.

Paper Format

Many institutions and banks are beginning to go paperless but that doesn’t mean everything will be digital format. In some cases it’s a good idea to have a paper backup copy.

When storing your financial documents at home make sure that they are filed discreetly. It will protect you from the danger of someone uncovering personal information that can be used to steal your identity.

A lockbox is a smart choice but since they are easy to transport, they’re also easy to steal. In theory, someone could walk away with the whole thing and work on breaking into it later. A more sturdy (and heavy) alternative would be a home safe but that’s not always a necessity.

If you do file your documents outside of a locked area, be wary of storing them in any particularly obvious place. Think about the drawers you pull open when you’re trying to find something, and assume that anybody looking for something would look in the same places. Also, avoid keeping these documents near your computer or desk. Because it is the most convenient place to store things that you might need when doing your own personal accounting on your computer it’s also the most obvious for anyone who might be looking for personal information.

Natural disasters or house fires are also dangers to consider. Though your own safety takes priority if struck by such tragedies taking precautions to store your documents safely could help to protect your documents should something like a flood or a fire occur. Some safes are fireproof (at least to a point) so if you’re storing things like wills, trusts, or deeds that are irreplaceable it could be a precaution to think about.

For documents that are one of a kind or difficult (or impossible) to replace, an insured bank safety deposit box is your best bet. You can keep protected copies in your house for reference but originals can be kept at the bank for added security. But you store away all your financial records, understand that rules and regulations might make it difficult to get to a document quickly. If it’s after hours or the bank is closed on the weekend, you’re out of luck until they reopen their doors. It can be tempting to put away all your most important financial documents, but you consider how frequently you need to access them. If you’re living abroad and there’s a family emergency in your hometown, you don’t want to be stranded waiting to access your lockbox storing your passport.

Digital Format

Your computer is the access point for all information that you’ve stored online or on your hard drive. Storing financial documents digitally is a smart way to keep your documents organized, but they should be given the same level of attention and security as paper documents. If you do keep and file your paper documents, scanning copies and storing them digitally can help add further security.

There are several different ways to store your documents digitally:

  • Hard drive – There are two easy ways to store your documents on a hard drive:  by saving them to your computer hard drive or by saving them to an external hard drive. Because external hard drives are portable, they’re easier to transport. This can make it easier for you to keep your computer clean of more sensitive information and less worrying if you should spill water on your laptop
  • Stick drive – Also known as a USB drive. This is much smaller than a standard external hard drive can be quickly plugged into your computer. Because they are so small, however, they’re easily lost. If you do store your financial documents on a stick drive, make sure that you keep track of it by placing it in the same place each time when not in use.
  • Cloud  Cloud storage is beginning to look like the future of digital document storage. Frequently used search engines like Google offer a place for you to store your digital documents which can be accessed through an online account rather than a particular computer. It’s an easy way to keep your online files organized and easily accessible but make sure to protect your account with a password. Be sure to sign out of publicly used computers and check regularly to make sure that any computer you use isn’t infected with any viruses.
  • Storing Service  Depending on your needs, you can also look into a professional storing service. They provide protection for your documents via a web-based, encrypted system. The storage will come at a fee, however, usually in the form of a monthly or yearly billing.

Prune Your Documents When Appropriate

Despite the common notion that all financial documents should be kept for future reference, they don’t need to stay with you forever. Document pruning is a good way to make sure you’re only keeping the documents that remain relevant. It’s an opportunity to check-in regularly with your finances and to maintain a navigable organization. You can check out a more complete timeline here.

How To Safely Dispose of Old Documents

  • Shredding – Shredding continues to be the most effective way to destroy your documents. Unfortunately, it can be a  tedious task. It can also be costly if you have to buy a shredder or pay to have your documents shredded. There are options to participate in free community shredding events.
  • Burning – The jury is out on this one. Sure, you can burn your documents to a crisp, but it’s actually illegal in some states. It’s up to your discretion, but usually this is not the first choice.
  • Water Damage – As with burning, dousing your documents with water can destroy large quantities of documents. If you choose to go this route prepare for the lump of paper pulp that results and also take extra precaution that the water has actually blurred any sensitive information. Again, this should not be your first choice.

You don’t have to drown in your documents, but the ones that you do keep should be properly stored and organized. If managed correctly, you can save yourself the headache of shuffling through a mountain of paper or the threat of identity theft. Being more in tune with your financial documents can also have the added benefit of keeping you in complete control of your finances.

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  • Guest

    I absolutely love how easy it is to go paperless now. Makes my life so much less cluttered with all the necessary documents saved digitally.

  • MoneySmartGuides

    I absolutely love how easy it is to go paperless now. Makes my life so much less cluttered with all the necessary documents saved digitally.

    • Claire Murdough

      Me too! It’s incredible how paper can pile up.