3 Reasons You Need a Financial Spring Cleaning

by Jessica Sommerfield · 2 comments

It’s March, and even though much of the Midwest is still engulfed in the icy grip of the Polar Vortex, there are signs that spring is right around the corner.

Just as the increasing hours of warmth and sunshine motivate us to eliminate the dust and clutter from our homes, spring cleaning our finances is an important step to good organization, financial awareness, and protection against loss and identity theft. Plus, it might even save you money!

Here are three reasons you need a financial spring cleaning:

1. Organized files make life easier

The benefits of having neat financial files become clearer when tax season rolls around. Even if you have your taxes professionally prepared, you still need to present your financial records. Digging through years of old paperwork is time-consuming and frustrating — and honestly, shows a lack of good financial stewardship.

It’s not just during tax season you need to be able to find financial papers at the drop of a hat; whether you make a large purchase, sell property, or start a business, you’ll need quick and easy access to your documents.

Tips for organizing: 

  1. Shred old and unnecessary paperwork (more on this later)
  2. Create a filing system that is neatly labeled and logically organized (at least to you)
  3. Prevent piles of paperwork by setting aside time every week to sort through and file it
  4. Go paperless: paying bills online saves clutter, ensures timely payments, and may even earn you a discount

2. Reviewing paperwork keeps you aware of your finances

It’s easy to lose sight of what you’re paying for your insurance, mortgage, investments, and monthly service agreements if you’re not engaging with your financial paperwork on a regular basis.

Consider car insurance, for instance: many people forget to inform their insurance provider about status and household changes that may lower their rates. Looking at your statements can help you catch things you need to update, so you’ll be sure you’re getting all the discounts you’re eligible for.

Spring cleaning your financial paperwork can also be a time to cut back on unnecessary services. Are you watching 700 television channels? Are you actually using that many minutes on your cell phone plan, or that many gigabytes on your data plan? If you trim down your services to what you’re actually using, you can save hundreds of dollars a month!

3. Organization can protect you from data loss and identity theft

Paperwork can be accidentally thrown away, lost, or otherwise destroyed. If most of your important documents are in paper form, consider converting them to digital and backing them up on your computer, an external hard-drive, or a web-based storage service such as Dropbox or Google Drive.

Spring cleaning is the perfect time to start this important conversion of files. If you’re not tech-savvy, get someone to help you so you know you’re doing it right. At the very least, protect your most important documents with the use of a fire-proof safe or lock box.

You can also use this opportunity to protect yourself against identity theft, which can be devastating in the form of ruined credit reports, bankruptcy, or legal trouble. Safeguard yourself by shredding everything you throw away that contains your name, address, or any personal information.

This is a habit I’ve gotten myself into, and it really doesn’t take any extra time. It’s preferable to use a cross-cut paper shredder so thieves can’t piece back together your trash. If you shred your documents in a timely manner, there will be less information lying around that could be used against you. The general rule is to keep your tax documents for seven years, and the rest of your financial statements for at least one year. There are plenty of guidelines online regarding how long to keep particular kinds of financial records, so if you have a question, look it up.

Spring cleaning is a yearly ritual that should spread to our finances, as well. Keeping our files organized, being aware of what we’re paying, and protecting ourselves from loss are key to maintaining financial responsibility all year long.

Are you going to participate in a financial spring cleaning? What’s first on your list?

Money Saving Tip: An incredibly effective way to save more is to reduce your monthly Internet and TV costs. Click here for the current AT&T DSL and U-VERSE promotion codes and promos and see if you can save more money every month from now on.

Related Posts

{ 2 comments… read them below or add one }

Alex @ Credit Card XPO March 14, 2014 at 9:30 am

A good PDF scanner and shredder are 2 must have tools to keep any home office clean and neat. I scan almost every important documents into digital PDFs and shred the papers afterward to keep my office “paperless”.

Reply

Leonard @ The Wallet Doctor March 16, 2014 at 10:00 am

This is a great idea! Financial Spring Cleaning is something everyone should do. The miscellaneous papers can really build up and the sooner you can fight the chaos the better. Thanks for the great tips!

Reply

Leave a Comment