Jill on Money: Financial spring cleaning 2025

By Jill Schlesinger

Happy spring, or as I like to call it, shredder weather! This is my annual reminder to comb through your physical and electronic financial files and tidy up. Doing so can help you better manage your money and potentially uncover savings.

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What to toss — What to shred?

If you have not yet invested in a shredder, let’s get that on the to do list. As a reminder, scammers and fraudsters love when you throw out important documents, with personal confidential information in your trash.

Please get into the habit of shredding as much as possible all year long. Here are the categories of financial documents to either shred or keep.

Tax returns

Generally, the IRS can include tax returns filed within the last three years in an audit. If they identify a substantial error, they may add additional years, but the agency usually does not go back more than the last six years.

Therefore, keep your returns and all supporting documentation for six years, just to be safe. Anything beyond six years can go directly into the shredder. If you work with a tax preparer, ask whether they will maintain electronic copies of all returns filed.

Bank and investment statements

If you manage your accounts online, find out for how long your bank or investment company makes your documents available. For those still receiving paper statements, keep them for one year and for taxable investment accounts, flag any confirmations of purchases or sales for tax purposes.

Hold onto records that are related to home improvements and major purchases until you dispose of the asset. (Note: If you think that you may be applying for Medicaid in the near term, many states require that you show five years’ worth of statements, so you will need to hang on to them.)

Credit card bills

Unless you need to reference something for tax or business purposes, or for proof of purchase for a specific item, you can shred (or delete) them after 45 days. Like the bank statements, flag what you may need for taxes, like charitable contributions.

Utility and phone bills

Shred (or delete) after paying, unless they contain tax-deductible expenses.

Home improvement/big purchases

Keep all receipts until you dispose of the asset.

Insurance policies

Keep as long as the policies are in force. Once you have canceled the coverage or the term of the policy is up, shred them.

Important docs to keep forever

In a fireproof safe, on the cloud, or in a safe deposit box, retain birth and death certificates; Social Security cards; marriage licenses; divorce decrees, military discharge papers; and estate documents.

When it comes to this category, if you have any question about whether or not to hang on to something, err on the side of being a hoarder.

Review/consolidate accounts

The start of spring coincides with the end of the first quarter and tax time, a perfect opportunity to review your taxable investments. If these accounts generated too much income or capital gains, you might be better off swapping into index mutual or exchange-traded funds.

Of course, before doing anything, make sure that you understand if there is a tax consequence to moving to cheaper alternatives.

If you have orphan investment or bank accounts that need attention, consider combining them. The resulting higher balance may help avoid or reduce fees and even help you get better deals, not to mention, it will help streamline your financial life.

The same rule applies to old retirement or investment accounts that are looking for a home. Combining accounts makes it easier to monitor your entire portfolio and can help you maintain your desired allocation.

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Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at [email protected]. Check her website at www.jillonmoney.com.