For many, spring means opening windows, sweeping the dust out, and rotating wardrobes. While you’re freshening up your home, consider ways to also tidy up your finances.
Consider these four strategies to help you spring-clean your finances:
1. Clean Up Your Accounts
Do you find it challenging to keep track of your various financial accounts? Many people have checking or savings accounts at one bank, a brokerage account with another and an individual retirement account with yet another. Having a number of accounts at different institutions can make your financial house feel disorganized.
Consider consolidating where your accounts are held to gain a clearer understanding of your financial picture. Or, if you prefer to maintain accounts with different banks, take advantage of digital tools that let you see all of your accounts in one place. Getting that full picture can bring a fresh perspective about what you need to prioritize as you manage day-to-day cash needs and pursue your longer-term goals.
2. Toss Out (Some) Paper
If you’re still getting paper statements from financial institutions, you can change your preferences to “paperless” notifications. This includes credit cards, loans, brokerage accounts—even bills. Going paperless reduces the amount of physical clutter in your home, and it’s also more ecofriendly. When you receive statements digitally, you can more easily track your finances because your statements are all in one place.
As for existing paper records, many institutions will allow you to upload important documents into a secure digital vault. Once you have a digital copy, you can generally shred the paper one. Records you should definitely keep (digitally if possible, but paper records if not) include the past seven years of tax documents and any documents related to still active loans.
3. Organize Your Income and Expenses
When was the last time you took a look at your monthly finances? Just as going through your whole closet can help you decide what to toss or keep, taking inventory of your income and expenses can help you cut wasteful spending and make smarter financial decisions.
With a clearer picture of your budget, you can more carefully track how much you are saving for near-term goals, such as buying a home, as well as long-term goals, such as retiring by a certain age.
4. Plan for Future Tax Seasons
Some ease the burden of annual spring cleaning by scheduling deep cleaning days throughout the year. Similarly, tax planning may require your attention at multiple points throughout the year, not just during tax-filing season. Whether before or after Tax Day, it’s never too late to incorporate tax-efficient strategies into your financial plan.
Originally published by Morgan Stanley