What financial records should you not throw away?

Preparing taxes is always a timely reminder that it is not what you are entitled to but what you can prove.  There are countless tax deductions and credits available to a taxpayer but do you have credible proof to claim it?  For example, you cannot prove a business expense with a credit card statement. You need the underlying receipt as well.

For some, the paperwork that is our financial lives gets paid or dealt with and promptly disposed of. How dangerous is this practice? Consider the following pitfalls:

• the obvious example is returns and exchanges are usually not honored without a receipt even if you bought a store made brand. After all, how does the retailer know you purchased the good within the time allowable for returns and exchanges?
• product warranties usually will not be honored without proof of purchase. For those relying on extended product warranties offered by credit cards, the card holder is typically required to show both the proof of purchase and the credit card statement in the month the product was purchased.
• if you are claiming capital gains or losses and you bought the same stock at different prices, you need the transaction records to calculate your adjusted cost base. This is particularly important if you are enrolled in a dividend reinvestment program.
• disputing your cell phone bill, gym membership or lease on your apartment? How can you stand up for your rights without the original contract? Given the other side will not give it to you, its like fighting blind.

What should be some key items to retain?

1. Receipts for large ticket items. I staple the receipt with the warranty and put all of the warranties and instructions in a file folder.
2. Financial statements. Statements setting out your investment portfolio and transactions of what was purchased or sold is important for claiming taxes. Even if you only trade in tax deferred accounts like RSP or 401(k), the statements show a pattern to your stock purchasing behaviour which can be used to adjust accordingly.  I put all of these in a large folder with tabs (one tab for non-registered, one tab for registered).
3. Credit card statements. See above for claiming extended warranty protection. I also keep them to track monthly spending patterns month over month. They are compiled annually and stored. Receipts are stapled onto the credit card statement (especially important for claiming business expenses).
4. Bank Statements. They should be read for a reason- failure to do so within a period of time means you agree to the statement. If there are errors you do not spot, you are liable for them. They should be kept for another reason- to reconcile your cheque book and to track spending.
5. Contracts.I usually put these in a large folder.

There is a lot of planned chaos in my financial record-keeping. I keep all my receipts in a large black clip and I staple them to the credit card statements when I receive them. Then I put all my credit card statements in a folder every other month or so. There’s a folder simply labeled “tax”. I put anything related to taxes in there over the course of the year and only look at it around this time of the year. Finally, I have a filing box which is just all the odds and ends that have no easy classification for me (credit card terms of use tend to die quiet deaths in this box).

In other words, one does not have to file meticulously every single item in a separate folder or have a degree in library science. The key is to know where to find something quickly if need be.

Am I missing any important documents which need to be filed?