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Discover the key financial records you should keep for a secure future. Listen to Ralph Estep, Jr., as he provides expert advice on creating a record-keeping system that works for you.
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Ralph:
I often get questions from listeners about organizing financial documents.
Ralph:
Many people feel overwhelmed, trying to keep track of years and years of paperwork.
Ralph:
So today I want to give you some practical guidance.
Ralph:
On creating a record keeping system that works for you and keeps you protected.
Ralph:
So you don't want to miss today's show.
Ralph:
Welcome to our tax talk Thursday show.
Ralph:
We're not going to talk about taxes today.
Ralph:
We're going to be talking about record keeping.
Ralph:
I'm so glad you chose to join us.
Ralph:
I want to thank you for listening and supporting the program.
Ralph:
I'm coming to you this morning from the Estep Farm at the Saggio Accounting studio . So I always say, let me put my podcaster on and put down the overalls and push that adding machine to the side.
Ralph:
And let's get some financial wisdom from a Christian perspective.
Ralph:
Today, we're diving into an important topic.
Ralph:
And that's a question I get asked routinely and that's Ralph, what financial records do you need me to keep?
Ralph:
Where should you store them?
Ralph:
And for how long.
Ralph:
Don't forget to subscribe to the show and join our email list.
Ralph:
You do that at askralphpodcast.com . So you don't miss tomorrow show tomorrow.
Ralph:
I'm going to be talking about maximizing HSA deductions.
Ralph:
Those are health savings accounts, a great way to save on taxes.
Ralph:
So you don't want to miss tomorrow show.
Ralph:
Let's start with our relevant Bible verse today.
Ralph:
And this comes from the NIV translation.
Ralph:
It's from Proverbs chapter 27, verses 23 and 24.
Ralph:
And it says this.
Ralph:
Be sure, you know, the condition of your flocks, give careful attention to your herds for riches.
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Do not endure forever.
Ralph:
And I thought that was really a good Bible verse for today.
Ralph:
And this reminds us that we are all called to be wise stewards, what God has given us.
Ralph:
Part of good stewardship is knowing the state of our finances by keeping orderly records.
Ralph:
You don't know how many times I've had to work with clients.
Ralph:
Who didn't have clean and clear and orderly records.
Ralph:
When we systematically track income expenses.
Ralph:
Assets and debts.
Ralph:
We gain crucial insight into our financial health.
Ralph:
Here's the deal.
Ralph:
Disorganization leads to confusion and poor decision-making.
Ralph:
So let's walk through exactly what you need to keep and for how long one of my clients was in a week or two ago.
Ralph:
And she asked me this question, she said, besides tax documents, Ralph, what should I be keeping?
Ralph:
So here's my advice.
Ralph:
First, keep digital or paper copies of tax returns and supporting documents.
Ralph:
This includes forms, W2, 1099's donation receipts.
Ralph:
If you have a business, a business expenses, credits, and deductions and any other tax related items.
Ralph:
Now the IRS recommends keeping these records.
Ralph:
For seven years in case you are audited.
Ralph:
Some experts say, keep tax records indefinitely for historical purposes.
Ralph:
You want to store them in a safe place, like a filing cabinet.
Ralph:
a, safe or on the cloud storage.
Ralph:
One of the things we offer our clients is we have a product called smart vault where we actually store those things into cloud.
Ralph:
But so the IRS recommends seven years.
Ralph:
I think that's a pretty good way to keep track of them
Ralph:
next.
Ralph:
Bank and investment statements.
Ralph:
These help track income spending and savings patterns over time.
Ralph:
You want to keep at least three years of monthly statements, either in digital or printed format, don't rely on the banks to store those for you.
Ralph:
You want to download those and bring them on to some kind of storage device for yourself.
Ralph:
And if you have the room seven years is even better for analyzing longterm trends.
Ralph:
Now let's talk about medical receipts.
Ralph:
So I advise you keep medical receipts from doctors, hospitals, dentists optometrists and other healthcare providers.
Ralph:
Especially if you've used these as tax deductions or for insurance claims again, I would recommend keeping these things for seven years.
Ralph:
That's what's mandated by the IRS.
Ralph:
Now we'll talk about utility bills and credit card statements.
Ralph:
They also paint a picture of your spending.
Ralph:
I would recommend just, like I talked about bank statements, Keeping at least three years worth of monthly statements to compare costs over time.
Ralph:
Again, if you want to store these in the cloud, that's fine.
Ralph:
Just don't rely on the banks for their going back and look at your statements.
Ralph:
Now how about major purchases?
Ralph:
So here's what I say about that for purchase receipts on major items like vehicles, electronics, appliances, furniture, et cetera.
Ralph:
Here's a deal.
Ralph:
Keep them until you dispose of them in case you need to make a return or a claim actually had this situation not too long ago, with something I had bought and I had to go back and find the original receipt, which was a challenge, but guess what?
Ralph:
I'm a little anal retentive and a little bit OCD.
Ralph:
So I actually scan in all the receipts.
Ralph:
Here's another thing a lot of people don't think about.
Ralph:
You want to keep track of your paycheck stubs, that will show what you paid and what was withheld.
Ralph:
And I would recommend keeping those for a year for tax purposes.
Ralph:
But if you got room three years is even better.
Ralph:
That way you can always compare your year end.
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Final pay stub with what comes out on the W2 forms.
Ralph:
Now, once you filed your taxes, you could probably toss those things.
Ralph:
Here's another one.
Ralph:
A lot of people don't think about, and that's insurance policies for your home, for your auto, for your health, for disability, for life insurance, they should be kept until they expire.
Ralph:
So those life insurance policies you want to keep on to those for as long as you have that policy.
Ralph:
Holding on to expired policies for one to three years can also help resolve claims.
Ralph:
There are some times when you had to go back, even when, insurance has been changed or canceled or ended.
Ralph:
Estate planning documents like wills trusts, power of attorneys are crucial to keep updated, but more importantly, stored securely until they're no longer valid.
Ralph:
You want to share these copies with executors, but keep original safe.
Ralph:
A few months ago, I did an interview with an attorney.
Ralph:
We talked about this very issue.
Ralph:
You might want to go back and relisten to that.
Ralph:
But if you have these estate documents, you want to keep those for as long as they're still valid.
Ralph:
Now, if you go and get new documents done, You want to destroy the old ones?
Ralph:
Another thing You want to keep track of your retirement plan statements.
Ralph:
These can help you track pensions.
Ralph:
401ks IRAs and other accounts, you want to keep these annual statements and until you cash out the accounts and believe me, I've even seen situations where we had to go back to a original.
Ralph:
Years when a client had a IRA and go see what the original contributions were.
Ralph:
So it was very helpful.
Ralph:
They had those statements Finally documentation on home purchase, including the closing statement.
Ralph:
That's what you get from the attorney or from the closing title company.
Ralph:
When you go to settlement, you want to keep those mortgage contracts And payment records should be kept until you sell or pay off the property.
Ralph:
That way.
Ralph:
If you ever get into an issue where they have to look at your credit and go back and pull those receipts,
Ralph:
storing all these original hard copies can take up a lot of space over time.
Ralph:
It's funny, a few years back.
Ralph:
I had a client that said, can I deduct on my tax return, the cost of a storage unit?
Ralph:
And actually I looked it up and you could, so I recommend dedicating a safe filing cabinet or fireproof, safe to organize financial records.
Ralph:
You can pick one of these up.
Ralph:
They're not that expensive.
Ralph:
And then once you do that, you want to use files and folders to label group items clearly by year and by category.
Ralph:
Now another option you can do in this something I do personally, you can scan the documents to create digital copies on your computer on an external hard drive or secure cloud account.
Ralph:
You may want to keep them in two spots that way, if one of those accounts gets corrupted, you can go find it and just be sure this is really important to pass or protect your devices and online accounts.
Ralph:
You don't want somebody snooping into this information.
Ralph:
Remember.
Ralph:
Keeping good records demonstrates stewardship and wisdom.
Ralph:
But don't become obsessed or anxious about it don't become like me like OCD about it.
Ralph:
You'll drive yourself crazy.
Ralph:
Do the best you can to save important documents without accumulating clutter.
Ralph:
Focus on what you need to keep for potential taxes in the event that you get audited, maybe you have an insurance claim or for legal purposes.
Ralph:
It's really that simple folks.
Ralph:
So before we wrap up I want to remind all of our listeners to visit our podcast page, you do that askralphpodcast.com . There you can leave us a review.
Ralph:
Share your thoughts, or even send us a message with questions for future episodes.
Ralph:
As I mentioned the last few days, we're building our catalog we're future episodes.
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If you've got an idea that you want me to cover on the show, I would love to hear from you.
Ralph:
While you're there, make sure you join our email list so we can send you our daily email with what's going on with the show.
Ralph:
A lot of my clients and a lot of our listeners love to get that daily email.
Ralph:
You can also schedule a consultation if you've got some specific questions to talk about either finance or record keeping.
Ralph:
And if you know someone who has questions about record keeping.
Ralph:
And some basic guidelines for hanging on that.
Ralph:
Do me a favor and share this episode and share the program with them.
Ralph:
As we try to grow our audience.
Ralph:
I'll wrap up today's episode with a quick recap.
Ralph:
Keep tax records and supporting documents for a minimum of seven years.
Ralph:
That's what the IRS recommends.
Ralph:
Save three to seven years of bank and investment statements,
Ralph:
medical receipts should be kept for seven years.
Ralph:
Keep three years of utility bills and credit card statements.
Ralph:
And as I mentioned, hold on to major purchase receipts until you dispose of the item.
Ralph:
Retain paychecks stubs for one to three years.
Ralph:
Don't toss insurance policies until they expire.
Ralph:
And securely store estate planning documents until they become invalid.
Ralph:
And again, keep retirement plan statements until you cash out the accounts.
Ralph:
And hold on to that home purchase paperwork until you sell or pay off the mortgage.
Ralph:
If you sell your home, there may be a tax ramification to that.
Ralph:
So you're going to need that original paperwork.
Ralph:
That's one of the things that a lot of my clients struggle to find.
Ralph:
So strive to be organized, but don't become overwhelmed.
Ralph:
It's easy to become overwhelmed with this focus on saving anything tax.
Ralph:
Or claim related along with those estate and retirement planning documents, Key papers, tidy and secure and scanning is preferred just for space reasons.
Ralph:
I hope these record keeping tips empower you to gain clarity and confidence in your finances.
Ralph:
Allowing you to exercise wise stewardship again, please visit askralphpodcast.com . For more great content.
Ralph:
I'm a little biased because I'm the one that creates it.
Ralph:
And be sure to share this episode with anyone who might benefit from learning how to organize their financial records.
Ralph:
And as I always say, stay financially savvy, and God bless you today.
