Spring cleaning is usually associated with chores, like banishing dust bunnies from under the bed or polishing the silver, but the spirit of the season can also be applied to your finances. Follow this guide to declutter and organize your financial house.
If you have ever lost a key financial document or have been unable to find vital paperwork at a moment’s notice, this step is for you.
First, pare down your paperwork by keeping only documents that are necessary for tracking your finances over the long term or for tax purposes. Shred everything else.
If you are unsure about what to keep and what to toss, follow this handy guide:
Keep for One Year:
- Utility bills
- Paycheck stubs to check the accuracy of your W-2
- Bank statements to back up your 1099s
- Receipts for health care bills, if you plan to file a medical deduction
- Brokerage statements
Keep for Seven Years:
Any supporting documents needed for your taxes. Keep last year’s documents until 2019.
- Receipts for big-ticket items that you still own.
- Tax returns with proof of payment and filing.
- Brokerage and retirement account annual statements.
- IRS forms filed when contributing to a Roth conversion or traditional IRA
- Receipts for capital home improvements. Keep these until seven years after you move.
- ATM receipts.
- Credit card statements that lack tax-related expenses.
- Bank deposit slips (once the funds are visible in your account)
- Credit card receipts, unless the warranty requires proof of purchase or you may return the item.
Once you pare down your paperwork, create a central filing drawer and free up space on your hard drive to create a digital file just for finances. Back up your electronic files to avoid losing everything in a PC meltdown.
Consolidate Your Accounts
Consolidate your retirement and taxable accounts at a single financial services company. You may benefit from lower fees, and the move will make it far easier to track your assets.
Update Your Budget
If your financial situation has changed in the last year, spring is a great time to update your budget and start living within your means. Create a list of your financial goals and craft a budget that will help you reach them.
Check Your Credit Report
Once per year, you can get one free credit report from each of the three bureaus. Check them out each spring to review them for mistakes that could drag your score down.