Spring cleaning is a tradition, but it doesn’t just have to apply to typical items like clothes and old, dusty tools. You can start a tradition of assessing your finances to refresh and renew them for the future. Here are three tips for getting your financial house in order.
Purge Your Paperwork
You only need to hang on to important documents, like tax records, for seven years. It’s a good idea to also keep the last six months of bills on hand as well. Start by going through all your paper, financial documents and shred any bills, statements, expired credit cards or other old records that aren’t vital. Once you have separated all the important documents out, put them in a place you can easily find them. Try creating a simple filing system that organizes all your paperwork, like binders. Some documents such as life insurance policies, property titles, social security cards, and savings bonds should be stored in a safe deposit box at the bank, or in a fireproof safe at home. You should also consider saving your files digitally by scanning them or photographing them. Be sure your e-files are well organized in folders and back them up on an external hard drive or a data storage service like Carbonite.
Update Your Beneficiaries
Most of us will experience big changes in our lives like getting married, having children or getting a divorce. When significant events occur, it’s possible to forget to revisit the beneficiaries designated for our life insurance policies or accounts. If you haven’t changed your beneficiaries in years and something happens to you, your money could go to the wrong person, like an ex-wife. To prevent that, it’s important to look at your financial accounts and insurance policies regularly, and update them whenever a major event occurs in your life. At the very least, you should revisit your policies once a year.
Consolidate Cards and Accounts
Take greater control of your finances by consolidating your accounts. Start by looking at your credit statements to see how much you owe and what the interest rates are. Make a plan to pay off the small debts first. Doing this will give you victories that will motivate you to pay off the next debt. After you’ve paid down or paid off some debts, close accounts you don’t use much and consider consolidating the rest under the lowest interest rate. You should also think about rolling over retirement accounts from previous employers into one to make managing funds quicker and easier.