Survival Guide on how to manage financial documents?

As the number of your service years grows and with marriage and other family responsiblities, everyone faces the problem of properly managing various documents (mainly financial) since these keep on growing. Noone is sure of when one will need which document. I am also slowly facing the same situation, the documents are piling up and I don't have a full-proof method for storing them.

So what are the requirements for managing documents:

a) An effective classification method
b) A fire/flood/theft proof method
c) Easy to access when needed
d) Easy to add/subtract documents when needed

I was trying to find some methods people use and came across The Noguchi Filing System or Neat Receipts or using softwares like Quicken, M$ Money or some people use the traditional shoe-box method.

The biggest problem with me is that I am never sure of which doument to keep until which time, while led me to keep everything forever. This leads to huge pile-up of documents which becomes really really un-manageable.

I have not came across any Indian government guidelines on how long to keep financial documents, similar to what US-government (IRS) suggests.

A few guidelines can be useful though

  • Keep all the tax-related records for atleast ten years.
  • Keep quarterly retirement/savings plan statements until you receive an annual
  • statement. If the numbers match, shred the quarterlies and keep the annual summaries permanently.
  • Keep the important bank records for atleast five years; shred unimportant documents immediately.
  • Keep brokerage statements until you sell the securities.
  • Most of the time you can shred bills once you get a cancelled check. Keep bills for big items permanently. Keep the bills if it involves a warranty period.
  • Keep credit card receipts till it matches with your statements, then keep the statements for five years.
  • PaySlips should be kept until you receive your Form-16 at year end.
  • Keep house records permanently.

Remember: If possible, shred all financial documents when you get rid of them.

This is just a vauge guideline and individual discretion is solicited.

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