Spring is traditionally a time for cleaning and getting one’s house in order after a long, claustrophobic winter. As long as you’re getting your home in order, you may as well take the time to get your financial house in order as well.
Your financial records and long-term plans need fine-tuning periodically, just like your living space. Think of it as decluttering your finances and getting rid of what you don’t need or want. Think about what you want to accomplish for the coming year and how you can serve those objectives by streamlining your records and setting attainable goals.
Declutter and organize your tax records
Getting rid of old records can make it easier to find things you need, when you need them. Purge at least two years’ worth of old bank statements and get rid of those old financial records and receipts you tend to shove into a bottom drawer or closet. Set up a filing system for your tax returns, which you’ll need to keep safely put away and might use for reference if you file an amended return. The IRS generally audits taxes going back three years, so make sure you hang onto tax receipts and anything you might need in case you’re audited.
Insurance is another one of those “you-never-know” issues. A good general rule of thumb is to hold onto anything you think you may need. If you’re not sure, check with an insurance agent to see what you should be filing away if you ever need to provide backup for a claim. If in doubt, don’t throw it out!
These days, more financial institutions than ever are switching to paperless records. Store any electronic records you’ve received on your computer’s hard drive with backup copies on a separate disk. Typically, you should maintain redundancy with your bank, tax and insurance records. There are also a number of cloud-based services that will store your electronic records securely.
Most of us tend to save paper items, anything from stereo instructions to the warranty for your kids’ old swing set. You can afford to get rid of the majority of these documents, even if you think you shouldn’t. Piles of useless papers are the number one culprit when it comes to clutter and a home that looks disorganized and disheveled. Take the time to go through it all so you’re not accidentally shredding last year’s tax return. Make a pile of what you’ll take to the shredder and keep it all secure until you’re ready to dispense with it. In general, canceled checks, old bank statements, correspondence and old utility bills should be shredded. One good way to keep records and old documents under control is to scan and save them electronically, and then have them shredded right away.
You never know when something’s going to go wrong and you’ll need to provide your insurance company with an inventory of your belongings. Unfortunately, homeowners and renters often fail to maintain a list of everything. Take pictures or video of your belongings in each room and assign a dollar value to each item.
Financial issues for those in recovery
When someone enters a substance abuse recovery program, it can be easy to lose track of finances and debt. Make a complete list of all your bills, including when payments are due, and look into consolidating as much as debt as possible.
Plan for the unexpected
Organizing your financial records and planning for unanticipated contingencies can protect you against catastrophic financial loss. It’ll also keep you from making mistakes that can cost you more money. Take advantage of your spring-cleaning “window” and make sure your finances are in order.
Written by: Gloria Martinez
Gloria Martinez started WomenLed to celebrate the advancements women have made and inspire women to become entrepreneurs and seek promotions in the workplace. Today, only 21 of the Fortune 500 companies are led by women. Although women have made many advances toward shattering the glass ceiling, there is still much to be done. WomenLed is dedicated to increasing the number of women-led corporations, organizations, and small businesses by educating others about “women led” achievements.