Spring and cleaning go hand-in-hand. Along with going through your house and getting rid of old clothes and other items you don’t need anymore, it’s also the perfect time to take a look at your finances and get them in order. Take the opportunity to free yourself of money messes and start fresh for the future. Here are 3 tips to get you started:
Organize Your Financial Files
A good first step is to go through all your financial documents. Shred any bills, statements, expired credit cards or other old records. You only need to hang on to important documents, like tax records, for seven years. Keep the last six months of bills on hand and toss the rest. After sorting, put all the vital documents in a place you can easily find them. A good way to do this is to create a simple filing system that organizes all your paperwork. Try using binders, so you just have everything neatly organized in a few books, rather than a drawer full of papers. Extremely important 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.
Consolidate Your Accounts
Consolidating your accounts is a great way to take control of your finances this spring. When you combine accounts, consider all the potential opportunities to save money, like lower fees under one provider. 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 can help motivate you to pay off the next debt. After you’ve paid down or paid off some of your debts, close the 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 account to make managing funds quicker and easier.
Update Your Beneficiaries
Life throws us many curveballs. Most of us will experience big changes like getting married, having children or getting a divorce. When significant events alter the course of our lives, we often forget to revisit the beneficiaries we selected for our life insurance policies or accounts. If something happens to you, that means your money could go to the wrong person, like an ex-husband. 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.