How long to save bank statements?

Ask NJMoneyHelp

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Q. Is it necessary to save bank statements and if so, for how long? — Clutter guy

A. You should save bank statements, but not every one, and not forever.

The rule of thumb for most people is three years just in case you are audited, said Bill Connington of Connington Wealth Management in Paramus.

“The hardest thing for most people is to figure out which information to keep and which to shred,” Connington said. “Some people shred bank statements after a year, or immediately, fearing that such information could be stolen.”

Connington says he tells clients they should keep monthly statements for one year, than keep the year-end statement as a way to protect yourself from the IRS.

In some cases, it is wise to hang onto bank statements longer, Connington said, but it is up to each individual investor.

“One of the reasons you might want to hold onto them longer is if you own your own business, in which case I tell clients to hold onto them for seven years as a rule of thumb,” he said. “The other reasons why I suggest three years would be if you are going through a divorce, if someone tries to take you to court in the future, or if a creditor comes knocking, you may want to refer to them.”

Connington said the good thing about technology is that your bank may provide you with archived statements online or on paper.

Also, he said, remember bank statements provide proof of income from interest-bearing accounts and can be a record of tax-related transactions.

If your bank provides electronic statements, you could also save those on your hard drive as a paperless record.

“So is it necessary to hold onto bank statements? No. But it’s a smart financial decision to protect you and your family,” he said.

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NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.