The warmer weather may already have you taking out your broom and duster to spring clean your house. Shaking out those curtains, airing out your rugs, scrubbing those hard-to-reach places - they’re all rituals we come to embrace without even really thinking about them.
But what about your finances? Surely your financial house could use a spring cleaning, too – especially if you’ve been retired for a while, and have pretty much set your finances on autopilot.
Here are a few tips for tidying up your finances and making them spic n’ span.
Sort old paperwork and decide what to keep and what to toss.
If you’re like most people, you probably have a pile of old financial paperwork that’s gotten a bit out of control. You may have old receipts, insurance claims, tax documentation, copies of checks - whatever it may be, springtime is a perfect time to sort through it all and decide what needs to stay and what can go.
In general, you should keep your tax returns indefinitely, as they prove that you filed taxes for that particular year. Supporting tax documentation, like 1099s or W-2s, should be kept for up to 7 years, while pay stubs and bank statements can be thrown out after a year.
Rules may be different if you’re self-employed, of course, so check with your financial advisor if you have any questions.
Automate your monthly bills.
If you’re still writing out checks each month, you’re wasting a whole lot of time you could be spending on other things - like starting a new business, maybe, or finding a new retirement hobby, or building a better budget.
Consider automating your monthly payments on utilities and rent or your mortgage. You’ll never miss a payment, and since these bills don’t fluctuate all that much from month-to-month, you won’t be in for any nasty surprises.
Evaluate your estate planning.
Estate planning can get complicated, so it’s best to bring in a financial advisor to make sure that your wishes are clearly documented.
You may want to re-evaluate your will, if there have been any major family or financial changes since you first created it.
If your life insurance premium has gone way up, or if you no longer need your policy, consider a life settlement.
Through your financial advisor, you can obtain a life insurance policy valuation from a life settlement broker. If your policy is a good candidate, you can sell your policy to institutional investors on the secondary market, for more than the cash surrender value of the policy.
You can also take this time to review the beneficiaries for all your money - retirement accounts, checking and savings, investments accounts, etc. It’s easy to “set it and forget it,” so make sure you take a look after any major life event like a marriage, divorce, birth, or death.
Make electronic backups of your important documents and store them somewhere safe.
Using a scanner, make electronic copies of important documents - tax returns, insurance policies, deeds to your property, etc.
Then upload them onto an external hard drive and store it somewhere separately from your home computer. You may even want to put it in a safe deposit box at your bank, to be extra cautious.
Put together an emergency folder with instructions for how to handle your finances.
Everyone - but especially those with children, spouses, or others who rely on them - should have an “in case of emergency,” or ICE, folder with instructions on how to manage your household finances if something happens to you.
That means you need a list of all your household bills with due dates, amounts, whether they’re on auto-pay or not, and how to pay them if necessary. You should have information on your checking and savings accounts, retirement accounts, investment accounts, and anything else of value that someone may need to know about in your absence.
Include your login and password information for any online accounts, insurance beneficiary information, and a simple list of your major assets, like your house, car, real estate, etc.
You deserve to have your finances in the best shape possible. For more on improving your personal finances, read “Why You Should Have a Financial Advisor.”