Q: Seems I have important documents in folders all over the place, which probably isn’t the best way to keep them. I was considering saving them electronically…is that advisable?
A: In the digital age, where technology has revolutionized the way we manage our lives, safeguarding our financial documents has never been more critical. Here’s a guide on what financial documents you should back up and why these backups are crucial for your financial future.
From tax returns and bank statements to investment portfolios and insurance policies, our financial well-being relies on organized and secure documentation. Here’s a comprehensive list of important documents you may wish to consider storing electronically to be sure to keep them both safe and accessible:
Personal Identification Documents
Passport and Driver’s License
Copies of your passport and driver’s license are essential for various financial transactions, including opening bank accounts and applying for loans. In case these physical documents are lost or stolen, having digital copies can expedite the recovery process.
Social Security Card
Your Social Security card is a crucial piece of identification. A digital copy can help you quickly prove your identity in various situations, from job applications to financial transactions.
Income and Employment Documents
Tax Returns
Backing up your tax returns is essential for future reference, especially when applying for loans, mortgages or financial accounts. Digital copies make it easy to retrieve specific information when needed. When it comes to taxes, it’s best to keep any tax records for at least seven years and tax returns for one year.1
Pay Stubs
Keep digital copies of your pay stubs to track your income, deductions and contributions to retirement accounts. These documents also serve as proof of income for loans and rental applications.
Employment Contracts
Save copies of your employment contracts to reference terms, conditions and benefits. This can be crucial for legal matters or negotiations if needed.
Banking and Financial Statements
Investment Statements
Maintain digital records of investment portfolios, including statements from brokerage accounts and retirement funds. These documents are vital for assessing your financial growth and planning for the future.
Loan Agreements
Save digital copies of loan agreements, including mortgages, car loans, and personal loans.2 This ensures easy access to terms, interest rates and payment schedules.
Insurance Documents
Health Insurance
Back up health insurance policies, benefit summaries and coverage details. This is crucial for medical emergencies and filing insurance claims.
Life Insurance
Save digital copies of life insurance policies, ensuring beneficiaries have easy access to the information in the event of the policyholder’s passing.
Property and Auto Insurance
Keep digital records of insurance policies for your home, car or any other valuable assets. This aids in the swift processing of claims in case of accidents or disasters.
Wills and Trusts
Back up your will and any trust documents to ensure that your wishes are carried out. This is crucial for the distribution of assets and the well-being of your loved ones.
Power of Attorney
Save digital copies of documents granting power of attorney to a trusted individual. This ensures that someone you trust can manage your financial affairs in case of emergency.
Safeguarding your financial documents is not just a matter of convenience but a fundamental aspect of securing your financial future. By backing up personal identification documents, income and employment records, banking and financial statements, insurance policies and estate planning documents, you are taking proactive steps to protect yourself and your loved ones in various life situations.
Jeremy R. Gussick is a Certified Financial Planner™ professional at Gussick & Barnett Financial Planning, affiliated with LPL Financial, the nation’s largest independent broker-dealer.* Jeremy specializes in the financial planning and retirement income needs of the LGBTQ+ community and was recently named a 2023 FIVE STAR Wealth Manager as mentioned in New Jersey Monthly.** He is active with several LGBTQ+ organizations in the Philadelphia region, including DVLF (Delaware Valley Legacy Fund) and the Independence Business Alliance (IBA), the Philadelphia Region’s LGBT Chamber of Commerce. OutMoney appears monthly. If you have a question for Jeremy, you can contact him via email at [email protected].
This content is developed from sources believed to be providing accurate information and provided with the assistance of Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
Jeremy R. Gussick is a Registered Representative with, and securities and advisory services are offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.
Gussick & Barnett Financial Planning and LPL Financial are separate entities.
*As reported by Financial Planning magazine, June 1996-2023, based on total revenues.
**Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2023 Five Star Wealth Managers.