Clear the Clutter When it Comes to Your Finances!
It is that time of the year when most of us begin our annual spring cleaning. This year, while you are cleaning out your garages and closets, why not put aside a little time to clear your financial clutter? 23% of adults say they pay bills late and are charged late fees because they can't find where they put them. Clutter can be costly!
One of your first cleaning steps is to gather and review all those ATM receipts, bank deposit slips, and credit card statements that have been taking up space. Once you are sure that the withdrawals, deposits, and charges are reflected on your bank and credit card statements, shred them.
NEVER throw these financial documents in the trash because they can end up in an identity thief's hands, even if you tear them. If you don't own a shredder, check with your bank to see if they offer free shredding. Be sure to file any credit card statements reflecting big ticket items. They may come in handy for insurance purposes or to prove a warranty.
Some other items that you should also shred are any quarterly 401K or retirement statements as long as you have received the annual summary. After receiving your W-2 for the year, shred your pay stubs.
But you're not done yet. The IRS recommends that, if you received a refund, you retain your tax returns and supporting documentation for three years from the date the return was due or filed. If you paid taxes, records only need to be kept two years from the date that the tax was paid. Remember though, to protect yourself from identity theft or other illegal activity, do not just throw them in the trash. SHRED them. And don't forget that three year maximum. There is no need to save personal tax returns for years.
Now that you've cleaned up the clutter and have your financial documents out anyway, it's a good idea to make a list of where you store your essential documents. Documents such as wills, bank statements, insurance policies, checking accounts, stock portfolios, and mutual fund statements should be listed. Give your list to someone you trust or to the executor of your will if you have one. Doing this ensures that, if anything ever happens to you, your loved ones will know right where everything is, reducing the burden on them.
A clean house means an orderly home. We say that organized finances means an orderly life. Clean up that clutter!
