Remove the document clutter
We are all human, and we occasionally accumulate stacks of important documents and statements. Now is the time to go through your financial documents and decide which ones to keep and which to throw away. Keep recurring documents for one year, such as investment and bank statements, property and casualty insurance renewals, or social security and retirement statements. Only keep household bills and credit card statements until you have proof that the bill has been paid (unless you need these statements as evidence for tax filing or proof of purchase). All outdated and unnecessary statements should be shredded.
Try putting your saved documents in a folder with the most recent date on top. This way, if you need to find a specific document, you won't have to sift through a year's worth of backup. Perhaps you prefer to keep everything digitally. If so, consider naming folders with the year first, then the two-digit month, and finally the name of the institution or document. This keeps the files in a simple, chronological order. Remember that all electronic files, whether stored locally or in the cloud, should be backed up on a regular basis. There are many available these days that will sync your devices and securely backup your data.
You will have less clutter and a better understanding of what is in your possession if you pare down and keep only what is necessary - for tax purposes and tracking financial records.
Combine retirement accounts
How many retirement accounts do you have? You may have changed jobs and opened multiple retirement accounts over the course of your career. You aren't alone: Many people have aging 401(k)s, IRAs, and other convenient retirement accounts. Talk about financial chaos! This is an excellent time to bring 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 an old 401(k) into your IRA, compare the investment options and expenses in the 401(k) to what is available in your IRA. Combining multiple accounts may save you money and will almost certainly save you time. Most importantly, you and your advisor will be able to invest your retirement account more easily and strategically for today and the future. Calculations and taxes will be much easier when it comes time to take withdrawals.
Maintain your critical information.
Finally, as you begin to clear the financial clutter, you may discover that you have new accounts and people in your life since the last time you organized. As a result, now is an excellent time to gather all of your critical information in one place. This is referred to as your critical records organizer. If you already have your information in one organizer, it is possible that your information is out of date or that your professionals have changed. Use this spring cleaning time to review and update the information. If you've never organized your important information, make a list of all your current account numbers, access information, and professional contacts. You could keep this information on paper or use a mobile app (such as 1Password) or cloud-based document service (such as Dropbox). Keeping this information in one place is not only useful for you each year; it may become critical for your family. You may have account information and interact with professionals in your life, but the rest of your family may not know who to contact. Remember to inform the important people in your family where they can find this information in the future after you have updated and organized your critical information.
Spring cleaning your finances does not have to be a laborious task. You can reduce document clutter in your life by keeping important account statements in one place, tossing recurring documents, and shredding unnecessary or outdated personal paperwork. Consolidating multiple accounts that have accumulated over time will give you renewed confidence and control over your savings, and updating your information in a central location will keep you safe in the future."""
