Financial Planning Department
Spring is a great time to vacuum your car, clean the spare bedroom, and get rid of all those pesky Tupperware lids with no matching container. Have you considered adding organize financial paperwork to the annual to-do list? Here are some tips for cleaning out the financial clutter in your life:
Sort Through Paperwork –It’s time to go through the file cabinet full of unopened mail and bank statements. But, what needs to be saved and what needs to be pitched? Here are some guidelines:
- Tax Returns & Supporting Documents: It’s best to hold on to tax returns indefinitely, but what about W-2s, 1099s, and other supporting documentation? These should be saved for at least 3 years.
- Pay Stubs: Its smart to hold on to one calendar years worth of pay stubs. Then, at tax time, check your pay stubs against your W-2 to ensure that your income and withholding amounts match.
- Receipts: Saving ATM withdrawal receipts, deposit slips, and credit card receipts to check against your personal accounts is wise. Any receipts that you wont need later (to document tax deductions, for example) can go.
- Home Documents: Records of how much you paid for your home or how much you spent on home improvements can come in handy when its time to sell. Keep these for the duration of your ownership.
- Investment & Bank Statements: Check these statements each month to ensure that there were no suspicious transactions before pitching them. If a firm hasnt kept a full record of cost basis, some statements may need to be kept.
- Personal Documents: Items that would be very difficult to replace, such as birth/death certificates or marriage licenses, may be stored in a safe deposit box. Items that need to be on hand, such as Social Security cards, car titles, and property deeds should be kept in a fire-proof box or safe in your home. Wills and estate documents may also be stored in a safe-deposit box, but it is important that a trusted person is able to access these documents in an emergency.
Go Digital –Here are some tips to avoid paper clutter altogether and create a secure financial digital archive:
- Opt For Electronic Versions: Many online tax preparers and personal accountants can provide you with a digital copy of your tax returns. You can also opt to receive bank or investment statements electronically and sometimes even shopping receipts can be received through email instead of as a print-out.
- Scan: For those documents that cant be received electronically, make a scanned copy to include in your digital archives. Dont own a scanner? There are smartphone apps that can turn your physical copies into PDFs.
- Make a Back-Up: Protect your documents in the event of a computer crash. Its essential to have these documents saved in multiple places, such as an external hard drive or USB.
- Protect Against Fraud: Ensure that any confidential or sensitive information is saved in a password-protected file to reduce the risk of identity theft.
Invest in a Shredder –When you decide to dispose of financial documents, running them through a cross-cut shredder is best to protect against identity theft.
While these tips can help to eliminate clutter, getting organized with your finances also means making sure that you are on track to meet your goals. We recommend that you speak with a Hefren-Tillotson financial advisor to ensure your financial affairs are in order. Please contact Hefren-Tillotson for further details.
DISCLAIMER: PAST PERFORMANCE DOES NOT PREDICT FUTURE RESULTS. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.