Even with the best of intentions, financial clutter can easily get out of control. From the bills you receive in the mail to the receipts you receive at the doctor’s office to your financial and bank statements, it can all snowball into one big mess. Not only that, when you’re financially disorganized, you’re more likely to miss payments and incur late fees. Plus, how can you successfully set and reach financial goals if you don’t keep a pulse on the funds you have coming in and going out?
While decluttering your finances may be a tedious task, the work doesn’t stop there — you’ll also need a plan for keeping them in order once you have them all sorted out. Here are some ways to clear your financial clutter once and for all.
Invest in a Shredder and a Scanner
First things first, if you have a shredder and scanner, pull them out of the depths of the clutter. If not, invest in both. Financial documents, such as credit card bills and bank statements that you no longer need, are information sensitive, so you can’t simply bag them up and throw them away. Instead, they need to be shredded beforehand.
And a scanner is key to ensure you have electronic copies of certain documents and statements. With everything digitized, you can safely dispose of all that paper to free up space.
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Sort Everything Out
Next, go through everything. It may help with the overwhelm to sort things into general piles at first and then deal with the piles one by one. For example, make separate piles for banking-related items, tax-related items, credit card statements and so on.
Here’s what you need to scan and file electronically and what you can simply trash:
- Keep tax returns and legal filings permanently; here’s what the Internal Revenue Service recommends when it comes to your tax records.
- Keep supporting tax documentation, such as W-2s, 1099s, donation receipts and bank and brokerage statements for three to seven years.
- Keep pay stubs and monthly credit card and bank statements for one year.
- Keep utility, cable and cell phone bill statements for one month.
- Keep loan documents until the loan is paid off.
- In general, shred and trash everything else that doesn’t fall within these guidelines.
Note that all of the above documents may be scanned and saved electronically, including your tax returns. You may want to back them up to the cloud or save them on an external hard drive or flash drive in case something happens to your computer.
Here’s a list of original documents you should keep, even if you make electronic copies:
- Real estate deeds and titles
- Marriage licenses and divorce decrees
- Birth certificates and death certificates
- Social Security cards
- CD, bond or stock certificates
- Wills and other legal directives
- Defined benefit plans
- Life insurance plans
- Military discharge papers
To keep original copies of legal and other important documents safe, consider investing in a fireproof safe or storage box. You can also store them in a safety deposit box at your bank.
Schedule Your Bill Payments
Make a list of all your bills and due dates and then write them on a calendar so you can see what you owe and when. If some of your current due dates don’t fall within an optimum time, consider calling your lender or creditor and asking for a due date change.
You may also want to schedule some of your bills for automatic payments, which will save you time and ensure your bills will be paid by their respective due dates.
Opt Out of Paper Statements
Next, seriously consider opting out of paper statements when it comes to your bills, especially the ones that you have set on autopay. This can reduce the amount of paper you’ll have coming in each month.
If you’re worried about forgetting a payment due to not getting a bill in the mail, sign up for reminder alerts with your creditor or lender, which can be texted or emailed to you right before your payment dates.
Commit to Keeping Things Organized
After all your financial clutter is cleared, it’s important to keep things organized. Taking the time to scan and electronically file receipts, bills, pay stubs, tax records and bank statements as they come in will help you keep from rebuilding the clutter and keep you on the pathway to financial success.
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Last updated: Oct. 26, 2021