7 Reasons to Never Throw Away Your Receipts, Experts Warn – Best Life
It’s no secret that many people don’t like personal finance. Not only can the topic be confusing (and, let’s face it, boring), but it can also stir up anxiety and fear. However, the worst thing you can do when it comes to your personal finances is to ignore them. To stay financially healthy, you’ll want to put systems in place that work and check in on your progress regularly. An easy place to start is with your receipts. While you probably don’t need to keep proof of purchase for every piece of gum you buy, there are some receipts you’ll want to keep. Here, financial experts tell us the top reasons to keep your receipts and how to do it easily. Following their advice could save you a lot of money and headaches in the future.
READ NEXT: If you get this call from your bank, hang up immediately, officials warn.
The main reason you’ll want to keep your receipts is for tax purposes. In particular, you’ll want to keep a receipt for any items you deduct from your taxes. “This includes receipts for charitable donations, business expenses, and home office expenses,” explains Michael Collins, CFA, professor at the Gerrish School of Business at Endicott College. “You should keep these receipts in a safe place in case you are audited by the IRS.”
Larry Hendrickson, founder and managing partner of G&H Financial Group in North Canton, Ohio, recommends organizing those receipts into folders. Any time you buy something that you plan to charge against your taxes, you can drop the receipt inside. That way, when tax season rolls around, you’ll be ready to file and stop fumbling through your email for proof that you donated $500 to charity. “Keeping those receipts in an organized system will make your life and your CPA’s life a whole lot smoother,” says Hendrickson.
Business lunches and office supplies pile up, and you’ll want to save receipts when they do. “Most companies will provide their employees with a corporate credit card,” says Hendrickson. “Purchases on this card must be tracked with receipts which the employer will need to produce for their tax purposes.” If you’re unable to produce a receipt, Hendrickson notes that your company may ask you to reimburse them for undocumented expenses. Of course, this is something you want to avoid at all costs. Keep your company card receipts in one place and set aside one hour per month to file them according to your company’s instructions.
READ NEXT: If you receive this message from your bank, contact the authorities, the FBI says.
How many times have you wanted to return something, but couldn’t find the receipt? “You should save or at least know where to find on your computer your receipts for all purchases for at least 30-60 days after a purchase, depending on the seller’s return or exchange policy,” explains Lei Han, CPA, Associate Professor of Accounting at Niagara University. Keep a physical folder for paper receipts and a digital folder for receipts from online purchases. And voilà, you won’t have to wait in line at Target anymore.
Warranties are available for both large and small items, and if something you buy comes with one, you should keep the receipt. “In the event of a breakdown or defect during the warranty period, you can easily retrieve the proof of purchase when you contact the supplier or service provider,” says Han. Keep a folder titled “Warranties” for easy access.
RELATED: For more personal finance advice delivered straight to your inbox, sign up for our daily newsletter.
Often, insurance claims require receipts. “Floods, wildfires, tornadoes, hurricanes, blizzards and more are becoming more frequent,” says Tanya Peterson, Vice President of FreedomFinancial Network. “If you’ve been affected by this, be sure to keep all receipts for all purchases made afterward, whether it’s temporary lighting, hotel stays or major repairs. ” Your insurance company will probably ask you for them. Additionally, if you receive funds from the Federal Emergency Management Administration (FEMA) to reimburse your disaster losses, Peterson recommends keeping your receipts showing how you spent the funds. “FEMA can audit your expenses for three years,” she says.
The last reason to keep your receipts is for simple budgeting purposes. “When trying to create a budget or stick to one, keep all receipts and keep a diary of expenses,” suggests Peterson. “A lot of people are surprised at what they spend their money on every day.” Once you have a clear picture of your spending, you can identify where to cut spending in order to meet your financial goals.
READ NEXT: The IRS just issued this last-minute urgent warning to taxpayers.