Business - Documents to keep - and what to throw away

(This is part of Take Charge of Your Money, a partnership between INQUIRER.net and Citibank to help readers handle their personal finances well.)

Q: Our home was flooded during Typhoon Ondoy. Many of our important files and documents got wet ? and some may not be recoverable. I realized that I've been storing all my bills and income tax returns for several years now and wondered whether I need all these. What can I throw away? What documents should I keep and for how long? - Marissa

A: Filing important documents is a good habit that must be emulated by everyone. Many documents just have to be held on to for reference, proof of payment, legal purposes, settlement of dispute, and the like. If you have the needed documents on hand, you will be able to save time and effort in procuring a copy from the government office or private company you have dealt with should the need for the document arise. You will also be able to retrieve the necessary proof of payment when there is a dispute in billing with a utility company.

What documents should you keep?

1. Birth certificates, marriage certificates, entry of court judgment of the annulment of marriage and the corresponding court order, adoption papers. Although you will be able to secure copies of these from the National Statistics Office and the relevant courts respectively or other government agencies, it would be good to keep a copy each of these documents for your files. Keep them for life under lock and key.

2. Government IDs. Philhealth, SSS, GSIS, Pag-Ibig cards should be kept with you. File copies of them and store them in your filing cabinet. Likewise, keep also your SSS/GSIS/Philhealth documents which list down your beneficiaries. Keep them for life.

3. Other IDs. Make sure you have photocopies of your driver's license, company ID, student ID, and credit card on file. This will make it easier for you to get a new card should you lose one.

4. Insurance policies and receipts. Keep original and photocopies of your insurance policies, whether they are for life insurance or insurance for cars, house, health, etcetera. For life insurance, keep the policy for life. For non-life insurance, keep current year's insurance papers since these insurance coverages usually have only a one-year term. As for billing statements and receipts, keep them for the duration of the term of the insurance coverage.

5. Income Tax Returns. Some say you have to keep them for three years, others for 10 years so you will have them on hand should you be audited by the Bureau of Internal Revenue.

6. Billing statements from utility companies and credit card companies. Keep only the current year's bills and file alongside proof of payment.

7. Bank statements. Keep them for one year at least, even for three years if you can.

8. Medical records. For annual physical exam results, keep for a year. For records pertaining to chronic diseases, keep for life. Likewise, keep filed claim forms from health maintenance organizations and health insurance companies alongside receipts.

9. School records. File your transcript, diplomas, certificates, and report cards. Keep copies on file. You may need the transcript for immigration application, job application or for application for further studies. Diplomas and certificates will come in handy when you prepare your resume.

10. Job contracts. Keep for the duration of the job.

11. Payslips. Keep for a year and check the figures against your tax documents from your employer.

12. Deeds of sale. For assets you have sold or bought (ex.: cars, houses, etc.), keep a copy of the deed of sale on file.

13. Land titles and stock certificates. Keep the original in a safety deposit box in the bank. File photocopies at home.

14. Warranty records. Keep for the duration of the warranty.

15. Loan contracts. Keep alongside proofs of payment.

What to throw away
You can get rid of financial documents that are not useful to you anymore. Examples are cancelled checks, bank statements beyond the suggested time frame of 1 to 3 years, billing statements dating over a year, old pay slips, and bank deposit slips and ATM withdrawal slips after you have checked them against your bank statement.

Keep it organized
How best to store important documents? Here are some tips:
1. File each document type in an envelope or folder that is properly labeled.
2. Keep your envelopes or folders sorted alphabetically for easy access.
3. Use a filing cabinet, a regular cabinet, or plastic storage bins to store your files.
4. If you live in a flood-prone or low-lying area, store your files on high shelves.
5. Keep very important documents in a plastic waterproof case (ziplock will do) before storing in an envelope.
6. Periodically go over your files and get rid of documents you can already throw away.
7. Dust your cabinet and files regularly to prevent dust build up and allergies from occurring.

(INQUIRER.net and Citibank invite readers to ask questions regarding financial matters. Send your questions to personal_finance@inquirer.net or comment through our personal finance blog called MoneySmarts.)

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