Spring Cleaning for Your Finances

CFP Board Consumer Advocate Shares Tips to Help Simplify Your Finances This Season

The sun is shining and birds are chirping, which can only mean one thing – spring is finally here. While many people start to spend more time outdoors, for others the season carries heavier obligations, including tax preparation.

“Just like spring cleaning, you’ll inevitably be asking the ‘save or keep’ question many times as you prepare your taxes or clean out your desk drawers,” says CFP Board Consumer Advocate Eleanor Blayney, CFP®. “Without some guidelines, you may find yourself once again stuffing everything in one big envelope to be dealt with ‘some other time.’”

In her latest contribution to LetsMakeaPlan.org, Blayney outlines some simple steps consumers can take to de-clutter and reorganize their finances this spring-cleaning season. 

• KEEP: Buy a file cabinet. Information that must be kept permanently and in its original form – marriage, birth, adoption, citizenship and death certificates; veteran’s papers; health records – should be kept in a file cabinet. Other documents, such as passports and legal contracts, while not necessarily permanent, should be stored in the cabinet as well. Physical filing cabinets should be fireproof and secured with a lock, with the key or combination ideally given to your estate executor and/or trustees.
• KEEP: Use online storage and buy a scanner and back-up device. Now that we’re in the 21^st century, it is time to go digital. Online storage in the “cloud” makes sense for information you need to retain for a period of time, but not necessarily in its original form. Documents such as mortgages and student loans and banking, credit, and investment account statements can all be saved electronically, online and/or scanned and backed up to hard drive or similar device. It is important to remember that regular back-ups of your information will be necessary. And many CFP® professionals provide encrypted online vaults for storing scanned information, in which case a strong password replaces a sturdy lock.
• KEEP: Buy an expandable folder. Utilizing an expandable folder with organizational tabs will allow you to file items that are regularly replaced, such as your annual Social Security benefits statement, property, auto, health insurance policies and more.
• TOSS: Buy a shredder or hit delete. We receive an overwhelming amount of mail, either online or physically delivered, that we hang on to because we’re unsure if we will ever need it or not. Consider an economists’ approach to the “save or toss” question: Compare the benefit of tossing to the cost of retrieval, multiplied by the probability the information will be needed. Usually, you’ll end up tossing.

“Taking these organization steps will undoubtedly result in a tremendous sense of relief, even a sense of lightness,” says Blayney. “Working with a CFP® professional will help you stay organized, calm, cool and collected during this financial reorganization season, and all year long.”