How to Back Up Your Financial Documents

If you have accidentally deleted or misplaced a financial document, you already understand the importance of backing up your important files. However, saving your financial documents to a secondary location such as an external drive is only part of the battle. To truly safeguard your documents, try to keep them saved in at least three places. This could include your computer, an external hard drive, or a cloud service of your choice.  This way, if your local storage such as your computer or hard drive is damaged, you can restore your files using the cloud. Saving your files this way is perfect when your computer or external storage are both damaged by a power surge, malware, or a computer virus.¹

Two side notes related to data security. First, if you save files to an external drive consider password protecting files and storing in a secure location such as a safe. That way, if the drive is ever lost your data will not be compromised. Second, if you travel with a laptop, you should not store sensitive information like bank statements or tax returns on the computer. Laptops can be easily lost or stolen and while losing a computer is bad, losing your data could prove disastrous.

In applying the rule of three (local hard drive, external drive, and cloud), the third option includes both cloud backup services and cloud storage services.

Cloud backup is comprehensive, allowing you to completely restore all your files. This is a great option for keeping your important documents and files, financial and otherwise, together.

However, cloud storage allows you to store the files of your choice with a tight grip using encryption keys. This means that while your files may be protected by encryption, the storage service can still decrypt your data on its servers because it holds the encryption keys.

Considering Cloud Backup?

When you are choosing a cloud backup option, consider any fees or extra costs that you may be charged if you need to restore all your data at once, as well as any limitations there might be on the number of devices you can use. It’s also important to look at the total size of the storage space offered and ensure it’s appropriate for your needs.

Keep in mind that cloud backup companies might not be able to restore your system immediately. Make sure you pick an option that offers a recovery timeframe that works for you.

If you are looking to store sensitive or private documents, make sure to use a service that allows you to use your encryption key. However, if you misplace your passphrase for that key, you may be unable to access your backup data, and the service won’t be able to help.

Considering Cloud Storage?

If the majority of your documents are already safe, or you are looking to safeguard just a few important files, this may be a good option for you. Cloud storage also makes it easy to share files with others, such as your tax or legal professionals.

Cloud storage typically works with any device, regardless of the manufacturer or operating system. However, many cloud storage services do not offer robust customer services because the services they offer are much simpler. If you consider yourself relatively tech-savvy, this may be a good option for you.

Regardless of how you choose to safeguard your documents, it’s essential that you maintain some sort of backup system. Hopefully, you’ll never need your saved files, but you’ll be thankful they’re near at hand if that day ever comes.