Spring cleaning is an age-old ritual that has roots in Jewish, Christian, and Persian traditions. In the 1800s, spring brought about warmer weather which meant that the soot and grime from lamp, coal and wood heating used during the winter could be thoroughly cleaned out of the house. Spring cleaning is a ritual that has evolved with time and provides us with an opportunity to say goodbye to winter and prepare ourselves and our space for what is to come.
While spring in the northern hemisphere only lasts from March 20 to June 20, this cleaning and organization process for your Financial Matters can be applied year-round.
1. Capture. Before you begin cleaning out old files and organizing your financial accounts, gather all documents and to-do items into a single location. This may include tax documents, statements, transaction confirmations or receipts, account login details, and your financial goals for the year. Having all these items gathered in a single location will help you maintain focus, develop an effective system, and ensure that you address all items.
2. Organize. Now that you have captured all items relating to your Financial Matters, it is time to organize. It may be helpful to begin by asking yourself “what is it?” and “is it actionable?”. By organizing items into categories such as ‘action items’ and ‘important documents’ you will be able to better sort through and spring clean these items.
If the item is not actionable but is important, you may need to store the record. You should develop either an electronic or a paper filing system for documents such as tax returns, investment reports, or account statements. An electronic filing system can be advantageous as it will save you physical space and will require less printing in the future.
Organize your action items by the level of resources (time, energy, and materials) to complete the item. For example, if an item is time-intensive or is a multi-step project, you may need to address the action item during dedicated project time. Whereas, a simple to-do item, such as electronically signing a document, can be done whenever you have time and have access to the action item.
In this digital age, it may also be helpful to organize your login information for financial accounts. Consider using a password management tool to store your login credentials.
3. Clean. Now that items relating to your Financial Matters have been organized, you can begin cleaning.
The IRS recommends that tax records be maintained for three to seven years. Older documents can be shredded or deleted.
To reduce the number of investment reports and account statements, you may consider saving the annual report or statement and shredding or deleting the monthly, quarterly, or semi-annual reports and statements. A year-end report or statement most likely contains the same information that the periodical reports include for the year.
When updating your password management tool with financial account logins, consider changing your passwords. Changing your passwords every so often can help improve cybersecurity.
You may also consider setting up autopay for your recurring bills. This way, you can rely on monthly account statements to verify transactions, but you can reduce the number of paper bills you receive, and you can rest assured that a bill will be paid if you are on vacation or otherwise unavailable.
In addition to physically cleaning your estate plan by dusting off the file, you should read through the documents to ensure that the provisions in place still apply and are accurate. Personally reviewing your estate plan ensures that there are no changes to your wishes. You should also consult with your estate planning attorney for a periodical review as estate laws and taxes are ever-changing.
Alyssa Yocom is a Wealth Manager with Schultz Financial Group Inc.
Schultz Financial Group Inc. (SFG) is a wealth management firm located in Reno, NV. Our approach to wealth management is different from many other wealth managers, financial advisors, and financial planners. Our team of fee-only fiduciaries strives to help our clients build their wealth across four capitals: Financial Matters, Physical Well-being, Psychological Space, and Intellectual Engagement. We provide family office and wealth management services to clients located in Nevada, California, and other states. If you’d like more information, please check out our website or reach out to us via our contact page.