Everything is going digital. Tapes, CDs, disks and paper are being replaced with bits and bytes of data often stored in a virtual cloud. Depending on your background, the digital world may be a mysterious and uncomfortable place. Lets take an objective look at the pros and cons of going digital versus using paper to organize your personal finances.
Paper Statements: Tried and True or Time to Go?
Paper is the default method for managing and organizing your finances. Online banking in the United States started in the 1980s, but electronic statements and digital financial management did not become mainstream until more than a decade later when home internet use became commonplace.
Thanks to its long history, paper statements still remain popular with many banking customers today. According to a poll from CreditCards.com, 54 percent of adults still get paper bank or credit card statements by mail. However, among younger millennials in the 18-25 age bracket, only 6 percent get paper statements.
With younger bank customers preferring paperless statements and an increasing prevalence of banks charging for paper statements, it is important to understand the pros and cons of going digital.
Benefits of Digital Financial Statements
Banks love paperless statements due to the low cost, but there are many reasons for consumers to enjoy going paperless as well. Here are some of the biggest benefits of going digital with your financial statements.
Identity theft protection
The single biggest measurable benefit of going paperless is your informations security. Mailbox statement theft is a real problem and bad guys use bank statements for identity theft. Turning off paper means not worrying about this type of theft, whether it comes from the mailbox or the recycle bin when you toss statements without shredding.
Save the environment
Our planet is in crisis when it comes to the environment. While trees are a renewable resource, the processes to create paper and ink, print statements and deliver them to your door takes a noteworthy toll on the planet. The United States Environmental Protection Agency says the average American uses one 100-foot-tall Douglas fir tree per year in paper.
No physical space to store
When paper statements come in the mail, you have to put them somewhere. Even a small filing cabinet takes up space, sometimes adding to cluttered offices and homes. Physical statements are also susceptible to flooding, fire, mice and other hazards that can degrade or destroy paper over time, ruining your records.
Storage is cheap and easy to organize
Digital statements fit on your existing computer, Google Drive, Box, Dropbox or flash drive. It is best to keep both a local copy and a secure, cloud-based copy of financial documents to ensure nothing is lost in the event of a computer crash or home disaster, like a fire. You can backup files online at no cost depending on how large your files are. A 5GB flash drive, enough space to hold thousands of statements, costs less than $5. A 32GB drive should be enough room to hold a lifetime of statements and costs about $10. Also keep in mind most banks store statements for up to 10 years, so you can access them by logging into the website even if you dont have a digital copy at home.
Money management apps such as FileThis, Finovera and Prism are a great way to go paperless and keep information at your fingertips.
Downsides of Digital Statements
While paperless statements are great for many reasons, there are a few downsides when comparing paper and digital statements. Here are a few considerations before clicking the button to go digital.
No physical record
Disaster movie fans can tell you the extensive downsides of a purely digital world. Doomsday preppers take it a step further by creating a backup plan to go off of the digital grid. While it is unlikely we will be attacked by aliens or experience a catastrophe as bad as the one in The Day After Tomorrow, in the event of a power outage, digital records are not accessible. If your records were hit by a bigger digital disaster, you could lose access to your files. This is why backups are so important when you move to a digital file system. Computer problems do happen, so keeping an extra copy is vital for key documents.
You need a computer or phone to access
The United State Census Bureau reports that as of 2014, 85.1 percent of American homes have a computer and 79.9 percent have the internet, both showing a roughly 2 percent increase over the prior year. A Pew Research Center survey found 88 percent of adults use the internet and 77 percent have a smartphone as of 2016. While nearly 90 percent of homes have computers and internet today, that leaves 10 percent without, and unable to access digital statements.
You have to print sometimes
Think about moving to a new state and taking a trip to the DMV for a new drivers license and license plates. Two proof of address documents are often required. If you can access copies of these documents online, you can print out the needed documents when needed. While paperless is great, there are occasional needs for a hard copy.
Digital Statements are the Future
Paper statements are not going away anytime soon, but they will slowly become less popular until one day they are gone for good. Banks are already taking steps to increase paperless adoption, including adding fees and minimum requirements to get paper statements without paying extra. As bank customers, we can take steps to get ahead of the curve and adapt, or we can cling to the older practice. Eventually, however, digital statements will become the standard.
Consider the pros and cons of paper versus digital statements when deciding what is best for you. It may be that paper makes sense for your system. The most important factor to consider: what will you really use and be most comfortable with. If you base your decision on that, you cant go wrong.