We all have important paperwork that needs to be safeguarded: insurance policies, loan papers, marriage documents, medical records, etc. It is important to know where to find these documents when you need them, while keeping them safe during a possible disaster or from thieves and/or hackers.
Here are some common ways to store sensitive financial documents. Each offers pros and cons, so carefully consider your needs before choosing where to store your important documents. Regardless of which storage method you choose, be sure to inform your spouse, attorney, or a trusted family member where they can find your personal and financial documents in the event something should happen to you.
Locking File Cabinet: A metal filing cabinet can be an affordable and handy storage solution for documents you need to refer to on a regular basis such as bills, warranties, health records, receipts and insurance policies. However, even under lock and key a cabinet can be broken into and is susceptible to potential disasters like fires or floods.
Fireproof/Waterproof Safe: Safes come in many different sizes, models and levels of protection. A fireproof/waterproof safe that is bolted down or hidden somewhere a thief can’t easily find provides security and owner accessibility. In addition, you can share the location and the combination with a trusted family member, making your documents accessible to others should the need arise. Costs vary depending on the size and type of safe you select.
Safe Deposit Box: These secure boxes are available for rent at most bank branches. In order to gain access to the contents of the box, you must produce an assigned key, identification and signature. Safe deposit boxes are highly resistant to fire, flood, and natural disasters and can be a secure place to store important documents that would be difficult or impossible to replace. However, keep in mind that access to the safe deposit box is limited to banking hours, so it is not advisable to store documents you may need to access quickly or on short notice. In addition, for security purposes, banks restrict who can access a safe deposit box. It may be problematic for a spouse or family member to obtain documents such as a living will or a healthcare Power Of Attorney — even if you give them the key — unless the box is jointly rented.
External Hard Drive: An external hard drive is a piece of equipment that sits outside of a computer and is connected via a high-speed cable enabling the transfer and storage of data. Hard drives allow you to easily back up information on your computer, and provide storage for electronic documents, photos and other files. Scanning and storing documents electronically can provide convenient access, while cutting down on the amount of paper to file. However, it is important to note that electronic copies of certain documents — such as a birth certificate, or the title to your home or car — are not acceptable and original certified copies should be stored in a safe place. Also, because of their portable nature, external hard drives run the risk of being stolen.
USB Flash Drives: USB (Universal Serial Bus) Flash Drives are portable devices which are about the size of your thumb and are used to store documents as well as music, video clips and pictures. They are inexpensive and easily used by sliding the device into the USB port of your desktop or laptop computer and copying your electronic files onto the device. Flash drives are convenient to use, but because of their size they can be easily lost or stolen.
Web-based Storage: Commonly referred to as “the cloud,” web-based storage refers to saving data to an off-site storage system maintained by a third party administrator. Instead of storing information on the hard drive of your computer, you create images of your documents and upload them to an online storage site that you can access from any computer with an Internet connection. Some of these services are offered for free with limited storage, while others charge a flat or a monthly fee. Make sure to use a reputable service that encrypts, secures and protects your data.