Every year, as April quickly approaches, I start to hear these types of comments from people: “I received a bunch of paperwork, but I still need to sort through it to file taxes,” or even more frightening: “I’m not sure I even know where my financial documents are.” This time of year, we all think about cleaning out the garage, maintaining the mower, etc., but financial spring cleaning (to avoid future messes) is usually an ‘I’ll do it tomorrow’ thought. I challenge you to take these rainy spring days to get organized instead. Here are some great, simple steps to help you:
1. Set up a three-tier storage system: hanging files for information you will need within the next year, such as receipts or transaction confirmations; storage bins for documents you need to save for more than one year, such as tax returns (3 years after filing) or real estate records (for as long as you own the property, plus 3 years); and a fireproof, lockable box for difficult-to-replace documents such as your Social Security card and estate planning documents.
2. While you have your hands on those estate planning documents, re-read them to make sure nothing has changed in your life that might require some revisions.
3. Make a clean sweep of your estate plan by checking the beneficiary designations on your insurance policies and qualified retirement accounts.
4. Get your once yearly free credit report from the three credit reporting agencies at www.annualcreditreport.com and clean up any entries made by creditors that are incorrect. Better yet, check your report for free three times a year by requesting a different agency’s report every four months.
5. Set up an automatic transfer from your paycheck or your checking account to a savings account to get an emergency reserve funded. Then, forget about those savings. Just like that dust accumulating on the top of the fridge, it’s out of sight, out of mind, and most importantly, out of easy reach.
6. Don’t ever again trip over the clutter of your busy life and forget to pay a bill or a credit card account on time. Use your mobile phone or computer to send you reminders of payments due, and thereby avoid those dirty, rotten late fees!
7. While you are changing your clocks and checking your smoke detectors, check your home insurance coverage as well. Make sure you have the necessary amounts of coverage to avoid any major out-of-pocket losses in the event of a fire or other disaster.
8. Make your next spring clean a much easier job by consolidating your investment accounts with one provider. Often, custodians will provide a single statement on your accounts, even if the accounts must be separately titled. I often see that people have so many different investment accounts spread among different custodians, that it becomes overwhelming. We can help you get them consolidated and make sense of this.
9. When those spring showers keep you cooped up for a long afternoon, review all your checks, credit card statements, and debit transactions from the year before. If you have online banking, you can usually export a year’s worth of transactions into a spreadsheet, which you can then sort and classify. You’ll see where you are spending the most money, and can therefore focus your budgeting and cost-saving efforts accordingly. This review should also provide the basis for a workable budget going forward – a must for anyone wanting to clean up his or her finances.
10. Are you feeling like you might have a heart attack just thinking about my “simple” spring cleaning steps? Never fear. Bring us what you have, and we’ll figure out a plan to get you on track to meet your goals.
The best part of this spring-cleaning regime: no heavy lifting, elbow grease, or strong chemicals required. All that is needed is time. And the more time you put in now, the less time it will take to manage your finances in the future.
Do you have an investment strategy that seeks to protect your portfolio against volatile economic conditions? Call me to schedule a free review of your current investment portfolio – 913.402.6099.
John P. Chladek, MBA, CFP® is the President of Chladek Wealth Management, LLC, a fee-only financial planning and investment management firm specializing in helping families and couples who are not yet retired realize their financial goals. For more information, visit https://www.chladekwealth.com.