One of the keys to financial success is being organized. When we’re on top of our finances, we become better stewards of our wealth and we find that reaching our goals becomes just a little easier.
With tax season coming to an end and warm weather on the way, it’s a good time to do a spring cleaning for your finances. Here are a few projects we recommend:
1. Throw stuff out. Hanging on to old documents creates a muddle. You need to keep tax documents for seven years and most other financial documents for a year. The rest of it—old credit card and bank statements, deposit slips and withdrawal receipts, canceled checks and bank statements—should have a rendezvous with the shredder.
2. Organize and protect. Create a proper filing system, because you can’t manage your finances unless you know where your records and documents are located. Store your important papers—Social Security cards, passports, birth and marriage certificates, estate papers—in a waterproof, fireproof safe. Good, portable safes are available for around $50. Make sure that a designated person knows where the safe is and how to open it.
3. Update your beneficiaries. Make sure your will and insurance policies have the proper beneficiaries. Remember that naming beneficiaries trumps your will. For example, if you prepared a will and named your spouse and as recipient of your retirement account—but your ex-spouse is still named as the beneficiary of that retirement account, your ex is entitled to those assets.
- Simplify. Time is money, and simplifying your financial life can give you back a fair chunk of it. Examples of how to simplify: Use direct deposit for pay, pension and Social Security benefits.
- Consolidate down to one primary bank account and one or two credit cards.
- Consolidate investment accounts.
- Set up auto-deposits for your savings and retirement accounts.
4. Protect your identity. Don’t assume that your identify is safe; this is the age of the hacker and cyber-criminal. Make sure that your passwords are strong and distinct from one another. Consider setting up fraud alerts, which all the major credit-rating agencies provide for free. Fraud alerts ensure creditors will contact you or verify your identity through other means before issuing new credit.
5. Create a calendar. If it’s on the calendar, it’s more likely to get taken care of before late fees and penalties kick in. Important due dates to add to your calendar include those for estimated federal and state taxes, property taxes, taking required minimum distributions if you are 70½ or older, and making contributions to your retirement or college savings accounts.
You’ll have to invest a few hours on these “spring cleaning” projects. However, your investment of time will set you up for a more confident and successful year.