Financial Spring-Cleaning Tips

Tax season is wrapping up and spring flowers are tempting us outside. Were you frustrated trying to gather documents to file that return? With a system and some financial housekeeping, you can eliminate those aggravating moments. Today’s a good day to set this up. In fact, do some other financial spring cleaning and review at the same time. It can save you some money, find extra storage space and keep important info current.

A tax organizing system doesn’t have to be complicated. In fact, my system is a hanging file in my desk drawer. All year as any document possibly related to taxes shows up in the mail, email or in my purse, I drop them in that file the same day. It helps if your spouse develops the same habit. When it comes tax time, all I have to do is sort the file by tax prep category: W-2s and 1099s, deductible items, charitable gifts, 529 contributions, childcare expenses, K-1’s, etc. For those who own rental property, a separate hanging file should collect any tax-related documents for each property. Have a small, at-home business, use another hanging file to collect expense and income documents as you go.

Speaking of files, time to purge if you’ve collected utility bills, bank or credit card statements or insurance policy info.  Any utility bill more than a year old, pitch it. Insurance coverage statements and bills more than two years old, trash.  Keep the original policy and any subsequent amendments you’ve received. Credit card statements more than a year old and bank statements older than three years can be shredded. The fact is most of this info is already stored in the cloud via the vendor’s website.

For the same reason, don’t drown in old investment statements. Keep the current year and the year-end statements for any investment account: IRA, 401k, 403b, brokerage accounts, bank C.D.s, etc. Shred the rest except…keep indefinitely any statement that records the purchase of shares of a mutual fund, stock or ETF, or individual bond so you will have the required cost basis for taxes when you sell…this assumes the cost basis isn’t recorded on your monthly statements (most are nowadays).

Review your beneficiary designations on retirement accounts, personal and group life insurance, 529 plans, annuities, and any bank POD (payable on death) accounts.  Are they current? Did you leave the new baby off? Or still name your ex-partner?

Finally look at your homeowner and auto deductibles.  If you can afford to self-insure for more than that original $250 deductible, change it to $500 or $1,000 and save some premium dollars. Insurance is for big expenses, not manageable costs. Check your liability limits. If there is a teenage driver in the household, ask your agent if you should increase this protection.  When the little darling finally leaves home or turns 25 (failure to launch), revisit this for adjustment.

Well, do you feel five pounds lighter? 

Guest blog written by Grace Worley, Retired Founder of Worley Erhart-Graves Financial Advisors