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Retirement

How to Organize Your Important Documents

Being an adult has its perks . . . and challenges. When you’re little, you dream about the day you get to drive your own car, have your own house, and stay up as late as you want. But you never think about the not-so-fun parts—like paying taxes, having a tooth pulled, or getting your driver’s license renewed. Oh, and what about figuring out how to safely organize important documents you’re supposed to hold on to throughout the years?

At some point, asking your 75-year-old mom to overnight a copy of your birth certificate just doesn’t cut it anymore. So how the heck do you know the difference between the important documents and the ones that should go straight to the shredder?

Don’t worry—we’ve got you covered. Let’s talk about which documents to protect, which documents to toss, and the why behind both decisions.

What Are Important Documents?

Important documents are those papers you need to keep around “just in case.” You’ll probably rarely ever need to use them unless a big life event happens, like buying a house, having a baby, changing your name, or making a will.

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But it’s in those important (but rare) times that you’ll realize you need an important document organizer somewhere so you can find them easily. So which are the most important documents to hang on to? They include:

  • Legal identification documents
    • Social Security cards
    • Birth certificates
    • Adoption papers
    • Marriage licenses
    • Passports
       
  • Tax documents
    • Tax returns
    • W-2s and 1099 forms
    • Any tax-related forms, receipts and records
       
  • Property records
    • Vehicle registration and titles
    • Mortgage statements, deeds and bills of sale
    • Insurance policies (home, auto, personal property, etc.)
       
  • Medical records
  • Finance records
    • Pay stubs
    • Canceled checks
    • Disability or unemployment records
    • Retirement/pension plan records
    • Investment statements

Everything else is probably just clutter. Commence shredding! But hey . . . are you wondering why you need to keep so many documents around? Especially as hard copies? We get it!

We know that filing digital copies of all those important documents away on a hard drive may seem like the best option—no loose papers, no mess and no worries. But it’s always a good idea to have a hard copy on hand, filed safely away just in case. Ever heard any tragic stories about failed hard drives? Lost laptops? Crashed computers? Those things happen every day, and when they do it often means crucial documents are now gone forever. When in doubt, print it out (and keep it filed in a safe place).

So when you’re doing your spring cleaning, make sure to file hard copies of the documents we listed above in a safe place. And no, we aren’t talking about that “safe place” that’s so safe you can never remember where it is.

We’re talking about an important document organizer with some sturdy defenses—like a fireproof document safe, lockbox or cabinet. Invest in some folders and labels, too, so you can keep all your docs categorized clearly. That way you or any family member can easily find them.

It’s great to get that important-papers organizer in place! Aren’t things feeling cleaner and safer already? Now that you know how to tell the important documents from the not-so-importants, you need to know how long you’re supposed to keep them around.

How Long Should I Keep My Bank Statements?

Bank statements: What are they even good for? It’s tempting to chuck them right in the nearest trash can as soon as you get them. But not so fast! They’re a great way to see all of your monthly transactions at a glance in one tidy place. So the next time you get one of these bad boys in the mail, take a few minutes and look for anything out of the ordinary. It’s an easy way to watch for red flags that could alert you to identity theft.

Everything look normal? Whew! Now go file that statement in a fireproof safe and keep it for at least one year. Same goes for all your pay stubs. You might need them to provide proof of income when you’re making a big purchase or to dispute any suspicious behavior that pops up on your accounts later.

How Long Should I Keep My Medical Records?

The Federal Trade Commission suggests keeping your paid (and undisputed) medical bills for at least one year. Listen: People make mistakes. That intern at the hospital’s billing department? They probably haven’t learned the ins and outs of their job yet, so you may or may not receive the same bill twice. But your medical bills will come in handy as a record of which bills you’ve already paid. Then you can kindly let the billing department know you’ve been double-dipped on. And if you haven’t paid or you’re disputing the bill, you’ll want to keep those records until the dust settles and everything is resolved.

How Long Should I Keep My Utility Bills?

Not long—unless you know you’ve got a trip to the DMV coming up and need to prove your identity or place of residence. In cases like those, you’ll want to have last month’s utility bills with your name and address front and center. Otherwise, have fun making your own confetti with the shredder.

How Long Should I Keep My Tax Statements?

Seven years. Yup—seven! You never know when you might need them. Maybe the IRS wants to do an audit. Maybe you’ll be buying a new house and need to prove you’ve been responsible in the finance department. You truly never know! So it’s best to keep anything tax-related around . . . just in case.

How Long Should I Keep My Receipts?

Shred those suckers now! Unless you’re working from your home office, doing home improvements, or anything else you might get a tax credit on, you really don’t need them. So go ahead and take that pile of receipts you’ve been collecting from your weekly grocery runs and shred them. This minimalism thing can be a whole lot of fun!

And just in case you were wondering whether to keep warranty records, receipts for big-ticket items (like that new TV), and even proof of home repairs—yup, you should keep those around until the warranty expires, you sell that TV, or move out of your house. Then drop ’em like they’re hot (in the recycle bin).

How Long Should I Keep Property Records?

That depends. You really should keep things like titles, deeds, mortgage statements and even insurance policies for as long as you own your property (or for the life of the loan). And once you say hasta la vista to that mortgage payment and your home is paid off, you’ll be thrilled—but you’ll still want to hold on to those loan documents for at least 10 years.

If you’re driving around a car on loan, it’s time to pay that sucker off! But when it comes to your loan payments, contract details, titles and proof of insurance, you’ll want to hang on to those for at least 10 years . . . just in case. Debt doesn’t often come back to haunt you, but it’s always a good idea to be prepared. Pro tip: Pay off all that old debt and say goodbye for good with Financial Peace. You’ll breathe a deep sigh of relief when it’s finally gone!

How Long Should I Keep Personal Records?

We mentioned several important personal records above. Examples are things like your birth certificate, marriage certificate, Social Security cards, retirement accounts, life insurance documents, will and powers of attorney. You need to keep all of these things—forever.

While your birth certificate, marriage certificate and Social Security card matter most when you’re alive, your loved ones will need easy access to your will, powers of attorney, living will and life insurance policies (like term life and disability) if there’s ever a time you can’t speak for yourself or after you’re gone.

When it comes to wills, powers of attorney, living wills, life insurance (like term life or disability), and even information on your retirement accounts, you don’t want to send your family members and loved ones on a scavenger hunt to find out what they should do with your personal property.

Here’s the rule of thumb: If you think you might need it, if it’s a personal identification document, if it’s something that has to do with your finances, or if it protects your future (like life insurance or a will), then hold on to it! And remember to shred any document with personal information on it before you toss it in the dumpster. You never know who could get their hands on it!

That covers all you need to know about what important documents are and how long you need them on hand. But there’s something else you need to know—the best way to keep your precious docs safe and sound!

Ramsey Vault provides peace of mind because it keeps your important information safe and accessible.” And in the event you're not around, securely storing the essential documents is a huge act of love for your family. Learn more about the Ramsey Vault and start organizing all of your important documents in one place.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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