Spring Cleaning

Tim Watters |

Tax season is here and if you are like me, you are in the process of pulling together statements, receipts and 1099s. It is also a good time to do some spring cleaning financially. Below are a few time tested tips to follow. The good news is that you do not have to do them all at once. We are here to help you.

  1. Set up a file system that works for you. It is a good idea to separate information you will need within the next year, such as receipts or transaction confirmations; storage bins for documents you need to save for more than one year, such as tax returns (3 years after filing) or real estate records (for as long as you own the property, plus 3 years); and a fireproof, lockable box for difficult-to-replace items such as your Social Security card, wills and other estate planning documents.
  2. Read your estate planning documents again to make sure nothing has changed in your life that might require some revisions. Often, the last time clients reviewed the documents was during the signing of the documents. Make sure that the people you chose for the various roles in estate planning are still the right ones.
  3. Make sure your beneficiary assignments are up to date. Often, people name primary beneficiaries but not contingent beneficiaries. It is also not a bad idea to discuss your beneficiary assignments with your attorney as well.
  4. Get your free credit report available annually (www.annualcreditreport.com) and clean up any entries made by creditors that are incorrect.
  5. Set up an automatic transfer from your paycheck or checking account to savings account(s) and begin building “slush fund” accounts to fund different emergency reserve funds for cash needs each year (i.e.; vacations, car repairs, gift giving). This will help you avoid building credit card debt because the money will be there when you need it.
  6. Embrace technology to help you pay your bills. Use your mobile phone or computer to send you reminders of payments due. This avoids your paying late fees!
  7. When you replace the batteries on your smoke detectors, check out your home owner’s policy as well. Make sure you have the right coverage. Often people do not have enough insurance for the big risks and have deductibles that are too small.
  8. Spend time looking at your checking account and credit card statements and debit transactions from the year before. If you have online banking, you can usually export a year’s worth of transactions into a spreadsheet, which you can then sort and classify.
  9. Consider using an electronic financial planning program like Quicken or www.mint.com. You’ll see where you are spending the most money and can therefore focus your budgeting and cost–saving efforts accordingly