Personal Finance: Time for Some Spring Cleaning

Spring is in the air. I know the weather outside is beckoning, but don’t forget that your personal finances can also use a little spring cleaning. Here are some tips to get you started on cleaning up your finances.

Get Rid of the Paper Clutter

You’ve just filed your tax returns. Now is the perfect time to go through your financial records and toss out the old, unnecessary paperwork before you add the new. Here are some general guidelines on how long you should keep your records.

Things you can purge monthly:

ATM receipts and bank deposits can be thrown out once you have received your monthly bank statement and reconciled your account.

Things you can purge annually:

Bank and other financial statements – Once you get the year-end statement, you can throw out the monthly statements for that year. The possible exception would be any investment purchase, sale or transfer notifications. You may want to hold onto those as long as you hold that particular investment so that you have a record of purchase date and price for capital gains on your taxes.

Pay Stubs – Once you receive your W-2 you can throw out your monthly pay stubs.

Things you’ll want to hang onto for three to six years:

You should keep your year-end statements for three years. If you’re self-employed, or have special tax circumstances, I’d keep them for six years.

As for your tax returns themselves, you should hang onto those for six years. But, you can toss the supporting documents after three years. Again, if you have special tax circumstances, you may want to keep everything for a full six years, just in case. You may want to keep your returns (without the supporting documents) indefinitely. This can provide some important and interesting earnings and tax history. You can always scan them in and keep a digital copy if you don’t want to keep a hard copy in the file.

Review Your Insurance Policies

You should review your insurance policies annually. If you have had any major changes in your life, this will be particularly important. Did you get married or divorced? Did you have a baby or did one of your children get a driver’s license? Did you make any home improvements? Did you make any major purchases like a vehicle, jewelry, a home?

Any and all of these circumstances are a good reason to review your coverage. Even if none of the above happened in your life, your home may have appreciated in value and your insurance coverage may be insufficient. Your standard of living may have increased making it a good idea to review your life and disability coverage to protect you and your family.

Finally, it’s never a bad idea to check with other insurance companies to make sure you are still getting a good deal on your coverage. Sometimes we ignore those annual insurance increases when investigating other providers might be able to get us a lower rate.

Credit report

You can get a free copy of your credit report from the three credit bureaus every year. This is something you should get into the habit of doing. You never know when a clerical error may have occurred linking someone with a less than stellar credit history to your report. Make sure everything on your report is accurate, and is really yours. If you see anything wrong, contact the credit bureau and have it corrected or removed. It may not seem like a big deal to you now, but if you decide to make a major purchase in the coming year, it can cost you quite a bit in higher interest rates if your credit score is lower than it should be.


Tax time is also a good time to review your investments. The government adjusts the ceiling for retirement account contributions annually. You may want to consider increasing the amount you have going into your 401K, especially if you started saving late and are concerned about having enough money for retirement.

You should also look at how you are investing your money. The general rule of thumb is that as you get closer to retirement, you want to invest a smaller percentage of your total investment in riskier accounts (usually stocks) and more in stable accounts (usually bonds). The reason for this is you have less time to recover from a sudden, drastic fall in the stock market.

Yard or Consignment Sales

As you clean out the clutter from your closets, your garage and your bookshelves, consider selling what you don’t want. Remember, one man’s trash is another man’s treasure! You can have a yard sale, take items to a consignment shop, or sell them online at eBay or Craigslist. You can then take the money you earned from your unwanted items and invest it for your future.

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