Top 4 Spring Cleaning Ideas for Your Personal Finances

Maura Schauss |

By Ann D. Blakey, CFP®

Just thinking about “Spring Cleaning” seems exhausting.  Putting winter items away.  Cleaning out closets. Bringing the sparkle back to windows. Refreshing landscape beds …. You get the idea.  

This year, spring cleaning can take on a whole new meaning – with permanent positive effects! Spring is an ideal time to review your finances and better position yourself to grow your wealth. Here we review the top 4 spring cleaning tips related to your personal finances.  Onward to financial organization! 

  1. Take Control of Clutter

Cleaning out the pile of receipts, bills, bank statements, and other financial documents can seem like a daunting task. But keeping a large mess of paperwork unnecessarily can cause confusion and distract you from what is important in tracking your finances. When you need to find something important, you have to wade through an intimidating pile to find it.

Here are some rules of thumb to help you know what documents to keep and for how long:

  1. Tax-related documents can be kept for 7 years, to allow time to get past the IRS limitations regarding audits. This includes any supporting documents, like business receipts, donation receipts, W-2s, etc.
  2. Mortgage and other loan-related documents can be kept for at least the life of the loan. Note that it is important to receive a payoff statement for big items like mortgages from the lender at the completion of the loan in order to have proof in the event of a dispute or discrepancy.
  3. Paycheck stubs can be verified against your W-2 at the end of the year and then destroyed.
  4. Monthly bills are rarely needed once your payment clears on your account. Once you have made a payment, make some space by shredding those documents.
  5. Insurance policy statements can be kept until you receive an updated policy.

It is also good to remember that for many situations, a digital copy of your financial documents will be sufficient for whatever you may face in the future. If you can scan and save, then shred and make space!

  1. Take Control of Credit

Consumer debt is an obstacle to anyone trying to grow their wealth. High interest charges are actively working against your financial future, like a faulty plug letting the water out of the bath.

Credit cards, school loans, or even unfavorable auto loans may be able to get tidied up into a debt consolidation loan with a lower interest rate. This is especially true if you’ve seen a credit score improvement in the last few years.

Unlike most consumer credit, home loan interest rates are still at all-time lows, and refinancing may save you tens of thousands of dollars. Evaluate your debt situation and see if you can clean up your credit!

  1. Take Control of Your Future

Social Security is one area that often goes overlooked until someone is closing in on their retirement or financial independence date. It feels like it has always been around, and we have a vague sense that it will be enough for what we need when we need it. But how can you be confident if you’ve never looked at the bottom line of your statement before?

If you’ve never even seen your statement, create a My Social Security account with the U. S. Social Security Administration.  You can then verify every year that the information they have is accurate and keep track of expected benefits when you are ready to draw from Social Security.

  1. Take Control of Taxes

One fantastic way to take control of your finances is by minimizing how much of your money goes toward taxes. Unfortunately, many people don’t know that the IRA incentivizes us to save on taxes by saving for health care, education and retirement.

Retirement investment accounts like IRAs or 401(k)s are tax-deferred, and IRAs have special rules that allow you to make contributions for the previous year well into the next year. It’s not too late to make 2020 IRA contributions – you have until May 17, 2021 to do so.

Spring cleaning can be a great reminder to review your 401(k) and make sure you are maximizing your tax benefits for the current year as well. If you are going to face a bill at the end of the year, you can reduce that by increasing your contributions throughout the year to your 401(k).  Similarly, a Health Savings Account is a great way to reduce your taxable income, while saving for your future health care needs.  And many college savings accounts also offer tax savings.

We’re Here to Support Your Unique Goals

If you are ready to take control of your financial clutter, taxes, credit, and ultimately your future, Washington Wealth Advisors is here to serve you. We support our clients building, investing and protecting their wealth by working together to create a solid financial plan that can be adaptable to life’s unique journey.

Call our office today at 703.584.2700, email clientservices@washingtonwealthadv.com, or book your appointment online to schedule some time with Ann

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