Your taxes have been filed, and now it's time for spring cleaning, which entails clearing out the filth and clutter in your homes and offices in order to enjoy a chore-free summer. Why not take advantage of this opportunity to "clean up" your money as well? You may keep your existing financial condition well-organized, simplified, and up-to-date with a little annual cleaning and our three suggestions.
Organize your documents.
We are all human, and we amass stacks of crucial documents and declarations from time to time. Now is the moment to go over your financial paperwork and decide which ones to keep and which ones to throw away. For one year, save recurring documents like investment and bank statements, property and casualty insurance renewals, and social security and retirement statements. You only need to maintain home bills and credit card statements until you have confirmation of payment (unless you need these statements as evidence for tax filing or proof of purchase). All assertions that are old or superfluous should be shredded.
Organize your documents in a folder with the most recent date at the top. You won't have to sift through a year's worth of backup if you're looking for a certain document this way. Perhaps you prefer to keep everything in digital format. If that's the case, start naming folders with the year, then the two-digit month, and finally the institution or document's name. This keeps the files in an easy-to-understand chronological arrangement. Remember that all electronic files, whether saved locally or in the cloud, should be backed up on a regular basis. There are many options these days for syncing your devices and backing up your data securely.
You'll have less clutter and a better knowledge of what you have in your possession if you reduce down and keep exactly what you need - for tax purposes and tracking financial records.
Combine your retirement accounts.
What is the total number of retirement accounts you have? You may have changed jobs and accumulated various retirement accounts throughout the course of your career. You're not the only one who feels this way: Many people have 401(k)s, IRAs, and other retirement funds that are nearing the end of their useful lives. Talk about a financial mess! Now is an excellent time to get them all together. Consolidating IRAs, SEP IRAs, and SIMPLE IRAs into a single IRA is possible. (You can only combine Roth IRAs with other Roth IRAs.) You can also roll over old 401(k)s into your IRA. When transferring your old 401(k) to an IRA, make careful to compare the 401(investment )'s options and expenditures to what's available in your IRA. Combining numerous accounts may save you money on fees and will almost surely save you time. Most importantly, you and your advisor will be able to invest in your retirement account more conveniently and wisely for now and in the future. Calculations and taxes will be a lot easier when it comes time to take withdrawals.
Keep your vital information up to date.
Finally, as you begin to declutter your finances, you may discover that many accounts and persons have changed since you last sorted. That's why now is a fantastic time to gather all of your important information in one place. This is what we like to refer to as your critical records organizer. If you have all of your information in one organizer, it's possible that it's obsolete or that your professionals have changed. Take advantage of the spring cleaning season to go over the information and make any necessary changes. Include all of your current account numbers, access details, and professional contacts if you have never structured your vital information before. You might retain this information on paper or use a mobile app (like 1Password) or a cloud-based document service to store it (such as Dropbox). Creating a central repository for this information will not only be beneficial to you each year, but it may also be necessary for your family. You may have account information and contact information for professionals in your life, but the rest of your family may not. Remember to tell the relevant people in your family where they can access this information in the future once you've updated and organized your critical information.
Cleaning up your money doesn't have to be a time-consuming task. You can remove the document clutter in your life by putting key account statements in one place, tossing repeating documents, and shredding superfluous or outdated personal paperwork. Consolidating various accounts that have accumulated over time can give you renewed confidence and control over your savings, and keeping your information updated in one single spot will keep you safe in the future.
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