NEW YORK (MainStreet) – By the end of February, the flood of tax documents and year-end financial statements to keep track of can make for some bulging, sloppy files. And that’s just part of your paper trail for the past 12 months. Your bank, brokerage and mutual fund companies have also showered you with monthly and quarterly statements, trade confirmations, prospectuses and annual reports over that time.

The list of documents relevant to your financial plan can be overwhelming sometimes, and while going paperless seems to be a great way to save file space and preserve a few trees, it may not make sense for every document.

Financial services firms and pushing the paperless option hard, banking on many consumers’ interest in minimizing their environmental impact. Banks say that electronic delivery by download or e-mail is an efficient, secure way to get important documents, but they have other goals in mind for themselves like saving a fortune in printing and mailing costs.

Occasionally, a financial services firm will actually offer to share its savings with its paperless customers by waiving selected fees – at least for a time. Most just suggest, vaguely, that cost savings will be passed on somehow.

But as a practical matter, customers have no real financial incentive to go paperless. Aside from the environmental issue, how do consumers win when they give up paper statements?

Aside from saving storage space, electronic delivery of financial documents does offer some extra security. You don’t have to worry about leaving old paper around for a dumpster diver to get your account numbers. You don’t have to worry about a fire or flood destroying your records, and you have timely access to important statements when you travel, just by logging onto your bank’s website.

But there is a difference between going completely paperless and merely accepting electronic delivery of important documents. If you opt for delivery by e-mail or download, keep an electronic copy on your hard drive, just in case something goes wrong with the firm’s system.

Also, in many cases, it makes sense to print out the electronic versions in case your hard drive dies. Since some documents like trade confirmations, which prove you bought or sold a given security, are so important, it really pays to have both electronic and paper versions. If you get confirmations electronically, print them right away and file them very carefully, so you won’t cheat yourself at tax time. These documents also may not be needed for many years, a paper copy protects you if computer languages change.

Although financial services firms keep most statements on file, there can be some confusion when firms merge, and if you close your account you may lose access or find that your documents have been purged. Paper copies protect you from depending on the organization’s own recordkeeping practices.

For most people, the paperless option is fine for documents like annual reports and prospectuses. Financial services firms keep these forever and they’re available on the Securities and Exchange Commission site. Also, few customers read these statements back to back, and since they can run dozens and dozens of pages, going paperless really does save trees.

Annual statements from brokers and mutual fund companies typically repeat an entire year’s activity, so you could save paper by accepting electronic delivery of monthly and quarterly statements, then print out the annual statement just to be safe.

Of course, if you print documents, you’re simply shifting the printing cost from the financial firm to yourself. It can pay to have a cheap black and white printer at home if you’ll be churning out a lot of documents, and you can also buy printer paper with three binder holes already punched, making it easy to keep orderly files with pages of uniform size.

Yes, it’s important to do your part to reduce the amount of paper you use every day, but don’t underestimate the value of proper hard-copy documentation of your financial activities if you ever need to answer for any mistakes you or your bank made in recording them.

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