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Financial Life Planning Advisors

It's Time to Spring Clean Your Finances

Spring has sprung. You know what that means. Time to spring clean! Why not get your financial house in order, too? It's perfect timing given you've likely already gone through stacks of paperwork in order to file your taxes. Here are some tips on how to review and organize your financial documents and accounts and keep them that way!


Set a Goal

To avoid becoming overwhelmed, commit to tackling specific tasks over a period of time, say a weekend if you have a block of time, or over a period of multiple days. Some examples include:

  • Sort through one or two file cabinet drawers or boxes.
  • Clean out a closet, counter space or a basket full of old papers.
  • Create a new filing system, whether paper or electronic.
  • Create a budget to track your income, spending, and savings.


Know How Long to Keep Paperwork

It's not necessary to save every receipt, bank or investment statement and piece of mail that comes through your house. This article from Real Simple magazine lists out what paperwork to save, and for how long.

Of course, certain documents should be kept indefinitely. Hold on to important documents like tax returns, wills, birth certificates, insurance policies, marriage and divorce decrees, and military discharge paperwork. Store them in a water and fireproof safe. Consider giving copies of your will and insurance paperwork to your financial advisor, a trusted family member or your lawyer in case something should happen to you.  


Shred Paperwork if You Have Electronic Versions

In many cases, much of the paperwork you have in print version is available online. Think bank, credit card and investment statements and vehicle, utility and other miscellaneous bills. Check with banks and financial institutions to make sure they retain these electronic records for the appropriate amount of time.

A home shredder can work just fine, or if you have a huge pile, many office supply stores offer in-store shredding services for a small fee.


Commit to Moving Paperwork to an Electronic Form

Once you've taken the time to eliminate as much of the paperwork crowding your file drawers as possible, get into the habit of moving ongoing paperwork to an electronic form instead. This will prevent a paperwork pileup of things like receipts, medical documents, warranties, statements, bills, etc.

You can a purchase a standalone scanner or use the scanning function on your home printer, but mobile scanning apps make it even easier to do. This article from PC magazine rates mobile scanning apps for 2018 so that you simply take a photo of any document from your smartphone or tablet, save it online, and then shred it.


Back it Up

Once you are comfortable scanning paperwork and saving it online, make sure it's protected. Cloud storage providers like Google Drive, Dropbox and Microsoft OneDrive make it easy and affordable to backup and organize your data. This article from PC magazine rates cloud storage and file-sharing services for 2018. Backups can protect you from accidental deletions, computer failures, and ransomeware. 


Make or Update Your Insurance Inventory

Renters and homeowners benefit from keeping and maintaining an inventory of possessions. If the unthinkable happens and your home is destroyed by a flood or fire, you will have the documentation you need to file an insurance claim.

Use a smartphone and take a room-by-room video in which you point out and describe the value of possessions you would want to file a claim against. Don’t forget to include items outside your house, like vehicles, sports equipment, outdoor furniture and structures, etc.

Going forward, photograph or video new possessions as you acquire them, and save this along with a scanned copy of the receipt and any other important paperwork that came with it. Once a year, review and discard the records for items you no longer possess.


Review Your Retirement Savings

Have you reviewed your assets and retirement accounts lately? Make sure to do so each year in order to update your beneficiaries and rebalance your distributions if necessary. Better yet, schedule an appointment with your financial advisor to review your financial picture and make any adjustments that your life circumstance dictates.


Increase Contributions and Consolidate Your Accounts   

Have an old 401(k) you haven't rolled over from an old job? Separate, small traditional and/or Roth IRAs with different investment companies? Consolidating your retirement accounts can make it easier to track and manage retirement savings.

At the same time, consider bumping up your contributions by 1% or 2% on 401(k), Roth IRA, and traditional IRA accounts if you aren't already maxing them out. You won't miss the money, but even small increases could make a big difference in the long run.

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Check the background of this financial professional on FINRA's BrokerCheck