Spring has officially sprung. If the sunshine and longer days get you itching to tackle your spring cleaning list, make sure that along with your drapes, windows and garage overhaul, finances make the list too.
You can probably clean venetian blinds like nobody’s business, but if organizing your finances causes you to launch into a full-on panic attack, I have broken the process down into a few easy steps. You can do most of them while you catch up on your House of Cards episodes. Yes, it can be that easy.
Gather. Bring all of your documents together into one central location. Collect warranties from the kitchen drawer, bills from the front hall table, receipts from your wallet, and the paper work that has been hanging out in the bottom of your purse since Christmas. Pile them in a central location in your house. May I suggest on the coffee table in front of the TV.
Purge. When spring cleaning the closets, the general rule is to say good-bye to something you haven’t worn in the last year. For financial documents, it is a bit different. For example, ATM receipts can be tossed after a month, whereas any documentation supporting tax claims should be kept for up to six years. Utility bills, credit card bills, banking and investment statements should be filed away for a year.
Once you know what you’re keeping and what you’re tossing, shredding is the simplest and safest way to dispose of any documentation that holds personal information. Believe me, becoming a victim of financial fraud is anything but simple or convenient.
Organize. Just as purging comes with that sense of accomplishment, putting everything in its place also feels awfully good – you’ve gathered, you’ve purged, now you’re going to organize. This can be overwhelming – but come up with categories that cover all of the statements, bills and other paper work that you have gathered and start filing the pile of papers away based on their category.
Here’s what I’ve found to work best for me, although as you get sorting, you’ll likely create others that are specific to you and your family:
• Bills to be paid
• Bills paid
• Bank Statements
• Investment Statements
• Taxes 2014
• Insurance
• Family health
• Warranties and User Manuals
• Forever Docs (things like marriage licence, will, birth certificate)
A tip for your “forever docs,” invest in a fire-proof, flood-proof safe or file of some sort. We had a customer whose house was gutted by fire and on top of all of the things that they had to do following their tragedy, they also had to get new birth certificates, marriage licence, and SIN cards. It is just one more thing to deal with should something like that happen. So take it from these folks and protect them.
Update. Consolidate. Simplify. Once everything is organized and you’re feeling like you have a handle on what is where, it is time to see if you can make some positive changes that will help you meet your financial goals faster and more efficiently.
You can do this by reviewing each file that you have built for ways to save or get smarter with your accounts. When you get to organizing your credit card file, for example, check to see how your card stacks up against the others by comparing interest rates, annual fees and billing cycles. If you find a card with a significantly lower rate than your own, consider doing a balance transfer. While you’re at it, scan your current statement to see if you’re paying unnecessary fees.
In terms of simplifying, as you move through each area of your finances, think about how you can simplify all of your accounts. Consider opting to have all bills and statements delivered to you online. This is something that is available at most financial institutions.
Financial spring cleaning isn’t just about shredding old documents and making neat piles, it’s about ensuring you’re getting the most out of every dollar and every account. It’s also about making it easier to locate important information and review financial goals and progress. So, once you’re done with the broom and squeegee, head to your finances and spiff them up for spring.
Kathy McGarrigle is Chief Operating Officer for Coast Capital Savings.
