Articles - Archived Feature

Spring Cleaning for Your Finances

The first day of spring. For many, that means setting a weekend aside for a thorough cleaning and reorganization of the house. But don't stop there! Spring is also a great time to get your financial house in order. Follow these five tips and you'll be well on your way.

Sort and shred. While you do want to hold on to some documents, like tax returns (hold seven years), many papers you think you need can actually be tossed once a year, like receipts, bank and credit card statements and utility bills. Also, when new Social Security and 401(k) statements arrive, the old ones can go. Remember to never just throw these papers in the trash. Prevent the possibility of identity theft by shredding them first.

Get organized. What's the point of keeping important papers if you can't find them? Try filing. Simply make two folders: one for regularly accessed papers, like bank statements and bills, and another for documents you handle less frequently, such as the deed to your home and insurance policies. Every year during spring cleaning, simply go through the files throwing away what you can, while moving what you need to keep to more permanent storage, like a plastic bin.

Go paperless. Cut down on the amount of paper you get by signing up for e-statements with your financial institution or utility company, for example. This way, information you need is sent to your email or is available online. Not only will this significantly reduce clutter, but it also cuts down on the potential for identity theft.

Cut down on cards. The average American carries five to 10 credit cards. With this many, you're at a much greater risk of overspending. Begin by cutting up spare credit cards and store cards, being sure the accounts are in good standing. Don't close several accounts at once and keep those with the best terms and rates.

Revisit your savings and retirement plan. Once a year, it's a good idea to look over your investment portfolios and Individual Retirement Accounts (IRAs) to make sure you're still on target given current market conditions. Reassess your attitude toward risk, and take into account any changes from the past year, such as number of dependents.

Clean and tidy financial records are just as important as a clean and tidy house—and they probably take less time! The next time you're able to find a document in a crunch, you'll be glad you added finances to your spring cleaning agenda.