A few days ago, I gave my daughter a privilege she’s never had before: I let her go downstairs and play by herself while I stayed upstairs and slept in a little longer. (OK, I admit, it was  privilege for me too.) When I finally walked downstairs at the blessedly late hour of 7:30 in the morning, my kitchen and living room floor looked like it had been struck by a blizzard. Small pieces of white paper littered the ground, strewn about by what I suspected was a pint-sized Jack Frost: my daughter had found where I’d been saving receipts.

For a money hoarder like myself, saving receipts isn’t just a quirky habit: it’s a way of life. I started doing it in January 2009. Using a series of color-coded envelops (are you sensing my OCD tendencies yet?), I sorted and saved receipts based on several categories: groceries, gas, children’s expenses, pet expenses, fun, etc. Every month, I’d empty the category envelops, tally them up, log the totals in an Excel spreadsheet and move the receipts to a new envelop, marked with the month and date. Like a squirrel, I’d bury the monthly envelops beneath the never-used phone books in a drawer in my kitchen, bringing them out only in the winter – aka, tax season.

While creating a paper trail by saving your receipts is one way to manage your money, it is, I have to say, somewhat unnecessary. Financial experts, including the folks at one of my favorite money websites, Main Street, agree that there are only three reasons to save receipts:

  1. Tax purposes – This really applies to business expenses. If you work freelance, like I do, this is absolutely imperative. The companies for which I work don’t take any withholdings for federal or state taxes; instead, they send me a 1099 form every January. Usually, this means I end up owing Uncle Sam instead of receiving a tax refund – except for my receipts. Because I work from home doing freelance, I can write off everything from my cell phone bill to my Internet service to the Microsoft Office software upgrade I bought to do my projects. Saving receipts allows me to go back and make sure I didn’t miss anything over the course of the year.
  2. Reimbursements – This is really more like reason 1B than its own reason, as it falls under the general heading of business expenses. If you travel for work, like my husband who often has to get to and from conferences on his own dime, you’ll need those receipts in order for your employer to reimburse you. Unlike receipts saved for tax purposes, however, you don’t have to save these long-term; rather, you can shred them (note, I said shred, not toss) once your reimbursement goes through.
  3. Big Ticket Items – There used to be a time when you needed a receipt in order to return or exchange just about anything you bought. Not so anymore. Most retailers, including big box mega-stores Target and Walmart, have policies that allow you to exchange merchandise using only your driver’s license. There’s a catch, though: you can only return a limited amount of merchandise in this manner. For example, Target only lets you exchange a maximum of $70 worth of merchandise without a receipt every year. That’s why you need your receipt, especially for larger purchases. You may also find it helpful to save receipts for products that have a rebate, although – like with reimbursement receipts – you can shred it once you receive the money.

In my house, I use saving my receipts as a money management tool as well. Although financial experts will tell you that cash is king, we still use a credit card for our purchases, namely because we get a nice cash back bonus. Saving receipts helps me stay accountable for every penny we charge – in a way, it makes me treat my credit card more like tangible cash than an unlimited source of money.