File Folders containing Tax and Financial Documents

6 Tips For Financial Spring Cleaning

Spring has officially sprung, so right now is the perfect time for some financial spring cleaning.

Time to clear your desk of paper clutter, purge the super old tax documents and pay-stubs from ten years ago, and get your financial house in order. Here are 6 ways to get organized and have that fresh-start feeling for spring.

1. Organize and shred old documents

A common question is, "What should I keep and what can I toss?" Sometimes it feels like too much to figure out, so you just do the safe thing and keep everything.

While keeping everything isn't necessary, here are some guidelines of what to hold onto and for how long:

  • Tax returns you should keep indefinitely. They’re proof that you filed and paid.
  • Supporting tax documents for your return, like W2s, 1099s, or proof of charitable contributions should be kept for 7 years.
    • The IRS has 3 years to audit you unless it suspects fraud so make sure you keep these things on hand.
  • Go through your bank statements, pay stubs, utility bills, and receipts for medical expenses and only keep the documents that are necessary. These items should be kept for 1 year so that you can use them for your return but, after that, it’s time to get out the shredder.

Always be sure to dispose of any important personal information safely. Don’t simply throw your information in the trash, as that’s an easy way to become a victim of identity theft. Visit our Security Center for more tips on how to prevent fraud

Not sure if you should keep an item? Scan or take a high-res photo and store the document on your computer! The IRS accepts scanned copies of receipts, so reduce your paper clutter and store it digitally.

2. Go paperless

If you don’t want to have to sort through all your paper documents again in a year then it is time to make the move to paperless e-statements. Learn how to sign up for monthly eStatements

It is easier to keep track of your finances when your monthly statements are online and easily searchable. Since most companies limit statements to a year or 18 months, you can download your statements from your financial institution so you have copies on your personal hard drive. It will save a ton of space in your desk drawers!

plant growing out of planter with shredded paper bedding with white background

3. Back up and then back up your backups

You want to save your important information safely and securely. Get an external hard drive or sign up for a secure online cloud storage platform. Do not depend on your computer or mobile device to safely store all of your information forever and ever. Kids (or you) spill drinks, devices get fried, and then your important financial information is lost for good.

Download electronic copies of your financial records to your computer and then back them up on a separate hard drive. You can also save your records on a secure cloud storage service like Dropbox or Google Drive. Set a calendar reminder to do this annually and you’ll never have to worry about losing your information again.

4. Create an “In Case Of…” folder

It is worthwhile to make sure that the important people in your life have access to your saved financial information, in case something were to happen to you. Make sure you have your information – including account numbers, login IDs and passwords – in a safe place, such as a password-protected folder on your hard drive.

  • Have a list of bills you pay each month and your other regular financial responsibilities on file.
  • Label the folder something inconspicuous, (don't label the folder “Important Financial Info”).
  • Be sure your In Case of Emergency Contact knows what the folder is called and how to access it, just in case.

5. Review your budget and tackle your debt

Spring Cleaning is a great time to create or review your monthly budget.

Go through your statements and separate your purchases into three categories

  • Necessary
    • Life expenses such as a mortgage or rent, regular utility bills, grocery bills, and insurance payments.
  • Desired
    • Monthly expenses like entertainment streaming subscriptions, new clothing items, or furniture upgrades.
  • Spontaneous
    • Spur-of-the-moment purchases, such as a take-out dinner habit or impulsive Amazon purchases.

See how these columns stack up against each other. Once you realize how much you may be spending on spontaneous purchases, set a budget for those extra items, and make sure you funnel that extra money into your savings. Create a Budget with our free coaching session

6. Set It And Forget It

After you look at your budget, push that extra cash to your savings - create a monthly automatic transfer to your savings account. It is easier to set up a weekly or bi-monthly amount of funds to transfer to your savings than it is to remember to save manually.

Having an automatic transfer to your savings account set as the same day as your payday is a good idea. You'll be less tempted to spend your money if it's automatically being funneled into a savings account.

Set some monthly funds aside to automatically transfer to your 401(k) or an IRA as well. Putting a little of each paycheck into your retirement investment will get you a lot further than making one lump contribution right before tax time.

And, don’t forget you can do this with your automatic bill-pay too! Link your bills up to your checking account and eliminate the worry of skipping a payment or having those annoying late fees. Learn more tips for banking online or on your mobile device

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While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.

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