Spring is the perfect time to give your home a deep clean. Much like how you invest time to declutter your living space, it is also a great time to organize your finances. Whether that means going through important documents, such as old statements and tax returns, or consolidating investment accounts, you will feel better for having done so.
Consolidating investment accounts becomes a consideration when you have multiple accounts in the same registration or even some old employer retirement plans (401(k)s, 403(b)s, or 457s) that can be rolled over into an IRA. This makes it easier for you to manage your investments and beneficiaries through a single account.
One key to keeping documents is to make sure you hold on to them as long as you need to, the timeframe of which varies depending on the document. Tax returns should be kept for 7 years from the date you filed them. Legal documents, mortgage records, and annual statement for your investment accounts should be kept indefinitely. Even receipts for home improvement should be kept until you sell your property. On the other hand, documents you don’t need to keep for even a month are utility, cable, and cell phone bills, as well as credit card receipts. Items like pay stubs, monthly/quarterly investment statements, and medical receipts should be retained for at least a year.
Once you have collected the documents you want to keep on file, there are a few different ways you can organize them.
Physical Storage
Some people have binders that they keep their most recent statements in with tabs sectioned off by account. Others may find file folders work best for them. One key consideration for keeping paper documents is to keep the most important of them in a fireproof safe as they would be the hardest to recreate if lost (think deeds, titles, birth certificates, and passports).
Saving Them Online
For those looking to embrace a more technological solution, consider the option to save important documents on a thumb drive, external hard drive, or cloud backup. Regardless of which digital method you use, you will want to make sure that your documents are secure. Something to keep in mind – you will still want to keep the physical copy of the most vital of your documents, even if you have a digital backup.
In addition to having your documents organized and filed away, it never hurts to have a summary list of accounts and contact information for any financial, insurance, or legal professionals you work with. You never know when someone may need to take over management of your finances or eventually, an executor will need to know what assets you own and how to find out about them.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.