The other day a friend of mine posted that she was doing some “spring cleaning” in the dead-heat of the summer. Here in Arizona, and many places around the country these days, the best time to do some cleaning is when you are forced to “hibernate” due to the unbearable heat.
This got me thinking. What a great time to invest some time into Financial Spring Cleaning. The following is a list of tasks you can easily do during the dead-heat of the summer and help you prepare for a more clutter-free fall.
1.Shred Old Financial Paperwork
It’s important to know what to purge and how long to keep the other stuff
- Copies of tax returns – it is actually recommended to keep these forever. Perhaps you can scan them or store electronically
- Supporting tax documents/receipts – IRS says to keep as long as you are subject for audit – 6 years a good rule of thumb
- Documents to support an insurance claim – inquire with your insurance agent for timeframe
2.Go paperless and back it up
It is my recommendation to ensure all your account statements are accessible online before throwing anything away (i.e. bank statements). Any electronic records you do maintain, ensure you back them up on a separate hard drive or cloud storage. It’s also good to have backups to your backups. You can subscribe to a back-up service that will automatically copy the contents on our computer to a secure cloud storage.
3.Review your credit report
Go to – annualcreditreport.com. It has been reported that as much as 70% of your report contains errors. These errors could be negatively impacting your ability to get a low interest rate.
Review your budget and set up automatic bill pay – make sure you include paying yourself first. This is a great time to meet with your financial advisor. A review of your budget and credit report can be a good exercise to ensure you are still on track with meeting your retirement goals.
Inventory all your insurance policies – home, auto, life, long-term care, and disability. Perhaps your home value has increased and your current policy doesn’t support the current value. You should also create a photographic inventory of the items in your house. This is necessary and helpful if you should ever need to file a claim.
Review the beneficiaries on all your accounts and estate planning documents (will, trust). It’s important to review these items to ensure they are consistent, i.e. IRA beneficiary and your will. Make sure your ex-spouse isn’t on your IRA, but your current spouse is identified in your will. Unfortunately, these oversights are seen a lot and can really create unnecessary hardships.
These items may not seem urgent and so it can be easy to procrastinate. However, just as with house spring cleaning the impact of delaying can create a house of chaos and can have significant results. Don’t let that happen to you. Take the dead-heat of summer and organize your financial house.