Now that your taxes have been submitted, it’s time to clean up your homes and work spaces in preparation for summer without any chores. Why not also take advantage of this chance to “clean up” your finances?
You can keep your current financial situation well-organized, streamlined, and up-to-date with a little annual cleaning and our three suggestions.
Get rid of the piles of important documents and statements
we are all human and sometimes accumulate them. Now is the time to go through your financial records and decide which ones to keep and which ones to throw away. For one year, keep recurring documents like bank and investment statements, renewals for property and casualty insurance, and social security and retirement statements.
Unless you need these statements as evidence for filing taxes or as proof of purchase, you only need to keep household bills and credit card statements until you have a record that the bill was paid. Delete any statements that are out of date or unnecessary.
Make an effort to arrange your saved documents in a folder with the most recent date at the top. This way, if you need a particular document, you won’t have to search through a year’s worth of backups. Perhaps you would rather store everything digitally.
If this is the case, you might want to think about naming folders with the year, then the two-digit month, and finally the name of the institution or document. The files are kept in this simple, chronological order. Be sure to regularly back up all electronic files, whether they are locally stored or in the cloud. There are a lot of apps available today that can sync your devices and back up your data safely.
You will have less clutter and a better understanding of what is in your possession if you reduce your possessions and keep only what is essential, such as for tax purposes and the tracking of financial records.
Consolidate your retirement accounts
How many retirement accounts do you currently have? It’s possible that you have had multiple retirement accounts and changed employers throughout your career. It’s not just you: Out of convenience, many people have aging 401(k), IRA, and other retirement accounts.
Talk about having too much money!
This is an excellent time to combine these. It is possible to combine IRAs, SEP IRAs, and SIMPLE IRAs into a single IRA. Only other Roth IRAs can be combined with a Roth IRA.) You can also roll over old 401(k)s into your IRA. Be sure to compare the investment options and expenses in the old 401(k) to those in your IRA when you transfer it into your IRA.
You might save money on fees and paper work by combining multiple accounts. Most importantly, you and your advisor will be able to invest your retirement account more effectively and efficiently for both the present and the future. Calculations and taxes will also be much simpler when withdrawals are made.
Update important information Finally
as you begin to organize your finances, you may discover that a number of accounts and people have changed. This is why it’s a great time to gather all of your important information into one place. This is referred to as your critical records organizer by us. If you already have your data organized in one place, it could be out of date or that professionals have changed.
Review the information and make
any necessary changes during this time of spring cleaning. Include all of your current account numbers, access information, and professional contacts if you have never organized important information. You can keep this information on paper, use a mobile app like 1Password, or use a cloud-based document service like Dropbox.
In addition to being beneficial for you each year, storing this information in a central location may become essential for your family. You might have professionals and account information that you interact with, but the rest of your family might not know how to get in touch with you. Remember to tell the important people in your family where they can find your important information once you have updated and organized it.
The process of spring cleaning your finances need not be exhausting. You can reduce the amount of paperwork in your life by organizing important account statements in one place, tossing frequently used documents, and shredding personal paperwork that is no longer needed or is out of date.
You will gain new confidence and control over your nest egg by consolidating multiple accounts that have lingered over time, and updating your information in a centralized location will keep you protected for the foreseeable future.
#finance #business #tips