Today is the first day of Spring, and there’s no better time to give your house — including your financial house — a good spring cleaning.
If you want to improve your money situation and take control of your financial future, cleaning up your finances regularly will help you more readily reach your goals — and do so with the least amount of stress. Whether you need to overhaul your budget or get a better handle on your credit standing, there are several things you can do to get your financial house in order this season.
1. Review Your Credit Report
By law, you’re entitled to order one free credit report yearly from each of the three major credit bureaus. You can get yours at no cost from annualcreditreport.com. Make sure your credit reports are free of mistakes because if there are any errors, it’s your responsibility to make corrections when you catch them.
Once you get your credit report, if you see something reflecting wrong information, take the proper steps to dispute and correct the inaccuracies with each bureau.
2. Organize and/or Shred Old Financial Documents
Sort through your statements, pay stubs, bills and other financial records, and keep only the documents that are absolutely necessary. Since the IRS has up to six years to audit you, keep your tax returns, canceled checks and receipts, and any records supporting your tax deduction for at least six years. If you’re unsure about whether you should get rid of certain types of receipts, scan them or make a copy, then go ahead and shred the rest. But don’t simply toss paperwork in the trash—that could expose you to potential identity theft
By scanning all records and receipts you can keep up with all your financial records, tax returns, warranties on appliances, etc in one location—on your computer.
Reducing paper clutter will not only help you stay more organized, it will also put your mind at ease. Plus, since the IRS accepts scanned copies of receipts, having those records available could come in handy in the event of an audit.
3. Record Your Financial Passwords and Store Records in a Safe Place
Make sure you’re not using the same password and log in information for all your online bank accounts and other financial accounts. Even though you might be logging in over a secure Internet connection, there’s still a risk that someone who figures out your password will attempt to access other accounts with the same log in information. Protect yourself against identity theft by logging your financial passwords in a document and storing it in a safe place. Also, important financial documents like a will, stocks certificates or bonds should be put in a safe place like a locked box.
4. Review your Budget
Is your budget up to date, or have you forgotten to make changes when you had an increase or decrease in income? Take a close look at your budget to see if you need to make any modifications. Make sure you’re reporting expenses accurately and have made some room for savings account contributions.
5. Analyze Your Insurance Coverage
We all have loads of insurance premiums to pay, ranging from homeowners or renter’s insurance to health care coverage, auto insurance, life insurance and more. The only way to know if you’re still paying competitive rates is to shop around. You might also consider raising your insurance deductibles, where appropriate, to save money.
6. Set up Automatic Bill Pay
Spring cleaning isn’t only about de-cluttering — it’s also about making things more efficient. Set up automatic bill pay, and link it to your primary checking account. Automatic bill pay will eliminate the chances of missing a payment and paying those pesky late fees.