Financial Paperwork Checklist: Start Taking Action

Decide on Any Action

One helpful way to work through these documents is, as you pick up each sheet, ask the question: is there anything I need to do with this document? If there is, then make a note of that action on a separate sheet of paper which will essentially become your to do list.

If the answer is no, there is nothing you need to do with this document or the item it represents, then you have a second binary question to answer: do you keep the document or not?

Don’t be tempted to DO any paperwork as you go through it – it’s tempting to think ‘Oh, I’ll just ring them’ and you lose your momentum. Write an action point on a separate sheet of paper and come back to it later. Don’t do it now!

Eliminate

Time to be brutal. Let's discuss what you actually need to keep.

HMRC suggests that any tax related paperwork should be kept for 22 months after the end of the tax year to which it relates. As the tax year ends on April 5^th, that means you should keep anything until January 31^st two years later.

For your financial accounts, tax-related stuff is likely to mean consolidated tax vouchers from investments not held inside an ISA, payslips from a pension in payment, at least until you get your P60 at the end of the year and any dividend vouchers.

Any chargeable event certificates, if you’ve got investment bonds or life insurance related investments. Anything tax related, keep it for at least two years. For everything else this is how long I suggest you keep paperwork:

• Bank statements: 1 year
• Utility bills: 1 year maximum, probably just the most recent one
• Employment and tax related documents like P60, P45 and payslips: 2 years
• Policy documents for insurance: The term of the policy
• Investment statements: Just the most recent copy
• Receipts and guarantees: For the life of the purchased item
• Anything else: Keep the most recent item for as long as you have the thing to which it relates

By sticking to these guidelines, you should radically thin out the amount of paperwork you have. Anything which is older and you have decided not to keep, place in one big pile – this is the stuff you're going to shred.

Work on Your Other Stuff

Up to now we've only really been talking about financial paperwork, but chances are you have quite a lot of other paperwork which isn't technically finance-related. I'm talking about things like receipts, guarantees, instruction manuals, medical information – things like that.

With medical information I think it is important to keep this indefinitely, particularly if you are likely to need to refer to it in future.

The best organisational hack I ever learned when it comes to receipts, guarantees and instructions – documents that pertain to a particular item in your household, whether it's your car or your toaster – is to create a file for each room in the house. If the toaster lives in the kitchen, then its receipt and guarantee document lives in the kitchen folder.

The TV is in the front room; my daughter’s hairdryer lives in her room; the printer lives in the study – you get the point. Rather than trying to sort these things out in alphabetical order (does the printer go under P, or HP for Hewlett-Packard or what?), sorting them by room means you will always know where to look.

What about big thick manuals which are going to be too big for a filing cabinet? Chances are you will always be able to download PDF versions of these from the Internet, so check that first and if so, recycle the paper version.