Keeping it safe: Managing your family personal and financial records

July 04, 2008|By LYNN LITTLE

Getting organized is not easy. It takes time and commitment to get all your family records in order and to answer such questions as: Where does our money go? How much do we own? How much do we owe?

Keeping family records in a business-like manner saves time, trouble, money and frustration. It assures that papers will be available when needed -- without the aggravation of trying to find them -- and possibly the cost and time lost in getting duplicate copies if, in fact, duplicates are available at all.

In establishing a record-keeping system, you need to consider: What records should be kept, where they should be kept and how long they should be kept.

Why store records?

Records should serve some useful purpose to warrant a place in the family filing system. Generally, records serve one of three functions:


· Provide evidence of some significant event in an individual's life such as a birth, death or marriage.

· Provide proof of ownership in cases of loss such as fire or theft or in cases of benefits and services provided by warranties, etc.

· Provide a record of activities such as those related to financial matters (budgeting, investing and determining tax liabilities) and those related to personal matters (health records, passports, etc.). When deciding whether to discard some paper, consider if you are likely to need the information in the future and, if so, whether it could be obtained from another source quickly, easily and inexpensively.

Store records with care

After determining what should be kept, arrangements must be made to have suitable storage for the records. Records are generally kept either at home or in a safe deposit box.

The location of some specific items depends on the amount of fire and theft protection available at home. For example, income tax returns are quite bulky to store, but very important to keep for at least three years and to protect from damage. A fireproof container would provide adequate storage at home. If all that is available is a cardboard box on the closet shelf or nonfireproof filing cabinet, then consider a bank safe deposit box.

Home storage can be divided into two areas: One as part of the home business center, convenient to daily activities; and the second, a "dead storage" box that might be located in a safe, but less convenient area of your home. The outer container of your home file should be fireproof or at least fire-resistant. A set of expandable paper folders kept in a metal filing cabinet or metal box works well.

Your dead storage box should also be of metal and located in a part of the house that is relatively safe from fire, wind and water. Portable metal files with handles and locks and marked "fire resistant" are available for such purposes.

A fireproof container, however, offers greater protection. Home files should contain items necessary for family and household operation such as information related to current years' taxes, medical records, bills, insurance policies, appliance warranties, a copy of your will, inventory of safe deposit box, etc.

Items no longer needed for current living, but needed for records, can be in the "dead storage" file.

Safe deposit boxes are available in most financial institutions and offer greater protection from fire and theft than most homes. All items that are difficult to replace, or irreplaceable, should be stored in a safe deposit box.

Keeping records

Keep items until they are no longer useful. Generally, personal records should be kept permanently. Any document relating to ownership, including repair and improvements, should be kept as long as the item is owned.

As you consider discarding documents, be certain that you are disposing of them in a way that protects your personal identity. For more information on deterring identity theft, visit and click on "identity theft."

The most difficult decisions about how long to keep records are usually those related to everyday financial transactions. In addition to proving information on personal financial progress, these records are usually pertinent for tax purposes.

The U.S. Internal Revenue Service can audit a tax return anytime during the three years following the filing of that return. However, the IRS has six years to audit returns that fail to report 25 percent or more of income. Or, if the IRS suspects fraud in filing returns, they may go back as far as they decide.

Financial emergency kit

As you work on your record-keeping system, also consider developing an emergency, financial, first-aid kit. The toolkit will help you identify and organize key financial records and then provide a quick reference file for your most important financial documents.

This toolkit could help you maintain financial stability in the event of an emergency. Visit for a description of the Emergency Financial Toolkit. You can also find information on emergency preparedness at

If you would like an electronic copy of the Maryland Cooperative Extension Recordkeeping fact sheet, e-mail me at with "Records" in the subject line. If you would like a printed copy, send a self-addressed, business-size envelope with a 42-cent stamp to Maryland Cooperative Extension, Washington County Office, 7303 Sharpsburg Pike, Boonsboro, MD 21713. Mark the envelope, "Records."

Lynn Little is a family and consumer sciences educator with University of Maryland Cooperative Extension in Washington County.

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