What documents do you need to keep, and what can you chuck?

By Marianne Curphey

what-to-keep

Sometimes it feels as though our lives are overwhelmed with paperwork - bills, bank letters, credit card statements and tax demands. You want to de-clutter, but you're afraid to throw out anything important. How long do you need to keep these documents, and which ones can you throw away?

What documents to keep forever
There are some documents that you need to keep indefinitely, and in their physical paper form because at some point, you will need the original document, not a copy. These essential documents are:

  • Premium Bond certificates.
  • Share certificates.
  • Mortgage papers.
  • The deeds to your property.
  • Your will.
  • Passports.
  • Marriage certificate and the birth certificates of you and your children.
  • Your driving licence.
  • Vehicle ownership documents from the DVLA.
  • Any legal documents, such as divorce papers or power of attorney.
  • Loan agreements.

These documents can be expensive and tricky to replace, so put them in a safe or fire-proof box. Be sure to keep updated versions (for example, if you change your will).

What to keep for seven years
In terms of your tax documents and correspondence with HMRC, it's advisable to keep everything for seven years, says Philip Pearson, independent financial adviser and founder of P&P Invest.

"These don't have to be in physical form," he says. "You can scan them and keep them in a dedicated file on your computer. These include payslips, P45s and anything relating to income or capital gains."

If you are self-employed, it is particularly important to keep all your records - including income, receipts, expenses and other documents related to your business - for at least six years in case HMRC investigates your tax affairs. You should also record and safeguard any information about charitable donations or gifts.

Other things to keep
It's a good idea to keep household bills and bank and credit card statements for at least two years. Insurance policies need to be kept for the duration of cover.

Warranties and receipts for large and valuable items should be kept for as long as you possess the goods or as long as the warranties are in effect. These could be stored as scanned files on your computer rather than paperwork to save space. It's also wise to jot down any serial numbers on items such as televisions, in case of loss or theft.

If you want to keep receipts for goods that you might want or need to return, such as electrical items or clothes, try using an app to store them. Many apps let you upload a photo of the receipt, which you can do quickly and toss the receipt immediately.

How to store your paperwork
The first step in really taking control of your finances is to organise your financial paperwork so you know what bills have been paid, what bills haven't, and where your statements are, says Simonne Gnessen, financial coach, founder of Wise Monkey Financial Coaching and co-author of Sheconomics.

"Sometimes not looking at where your money is going, not knowing what has and has not been dealt with, can cause great financial stress and worry," she says. "Not being organised, or knowing when to put limits on your spending, means that you have short-term gratification but don't have any long-term strategy for your financial health."

Gnessen says you need to create separate folders, physically and/or on your computer, for financial papers. You should have folders for banking, tax, insurance and any other financial issue that you have correspondence about - for example, pensions and utilities.

"You can then create a new sub-folder for each year," Pearson says.

"When a piece of paper arrives, file it immediately, or as soon as you can so that you keep on top of things on a daily basis," Gnessen says. "With your new filing system, you will always know where to put it, and where to find it when you need it again."

With the exception of the documents that need to be filed in physical form, a good option is to scan every piece of important correspondence you receive and store all of that on your computer, says Pearson.

"Then you can destroy the paper copy," he says. This can help reduce risk of fraud. Shred any documents with any sensitive information on them when you are ready to dispose of them.

He recommends backing up your computer with a separate hard drive so that if your computer is ruined, you still have the backup drive. You can keep this hard drive with your physical documents. He also suggests keeping duplicate files in the cloud, using a remote server, so that you are triple-protected.

Reduce financial clutter whenever you can by signing up for paperless banking and utility statements and bills. Make sure you save your statements to the hard drive, as banks tend to archive statements after a year to two and will charge you for access to old statements. 

Whatever you do, "Make sure you set up a simple system to enable you to locate the documents you need," Pearson says.

The impact of reducing stress and taking control in an area of your life that you have not been in control of before is massive, Gnessen says. "You are reinforcing a message to yourself that you are able to achieve these things, and that is a powerful message."

See related: 'Clear Your Clutter Day' creator says decluttering can improve your finances, well being, How your debt, mental health issues are related, Financial housekeeping: 7 things to check off your list

Published: 29 March 2017