Declutter Your Finances
“The simpler the space, the calmer the mind.”
Last week I finally took some time out of my hectic schedule to take care of what I had been putting off for a while. You know exactly what I’m talking about. I’ve had a pile of papers on my desk that have been staring at me for months. My account statements, letters from different financial institutions, magazines, junk mail, etc.
Any time I got something in the mail that wasn’t urgent, it went straight into the pile. Well, it was finally time to go through the stack and start getting organized.
When did you last give your financial life a good spring cleaning?
Just like many people regularly declutter their homes, our financial lives can also accumulate unnecessary baggage. It's easy to overlook the buildup of clutter and complexities in our finances.
However, ignoring this financial clutter can lead to significant problems. It not only occupies unnecessary mental space but can also waste your energy, time, and ultimately, your money.
So, what can you do to tackle this financial clutter before it becomes overwhelming?
Let's explore some straightforward and stress-free tips for spring cleaning your finances.
6 Spring Cleaning Tips for Your Finances
#1 Purge The Paper
Digitize recurring bills and monthly financial statements to reduce paper clutter. Review your existing financial paperwork and shred unnecessary documents. For essential papers, create digital copies by scanning them. If you're uncertain about what to retain, seek advice from your financial advisor.
Pro Tip: Overwhelmed by paper clutter? Leverage technology! Apps are available to help you digitize and organize your paper documents. Additionally, reduce unwanted mail like credit card and loan offers by visiting optoutprescreen.com.
#2 Audit Your Subscriptions
Go through all your subscriptions and get rid of any that aren't necessary or used anymore. This applies to things like streaming platforms, software, magazine and newspaper subscriptions, gaming services, and even recurring product shipments.
Pro Tip: To effectively track and manage your subscriptions, review your credit card and bank statements to identify all recurring charges. For easier future auditing, consider consolidating your subscriptions onto a single credit card.
#3 Consolidate Accounts
Having numerous bank, retirement, and brokerage accounts across various institutions can quickly become complex and costly due to multiple maintenance fees. Review your accounts carefully and aim to simplify by reducing the total number and consolidating them within fewer financial institutions.
Pro Tip: When consolidating accounts, remember to review their fees and requirements before closing any. Pay close attention to potential transfer fees, especially if you plan to move funds between accounts to simplify your finances. Consulting a financial professional can help you avoid unnecessary charges or limitations.
#4 Automate Savings
Establish consistent transfers to a dedicated savings account, selecting an amount you can reliably maintain. If you're unsure about the amount, begin with a manageable figure. For those already utilizing automatic transfers, review your current setup to determine if an adjustment or increase is appropriate at this time.
Pro Tip: Once a solid savings foundation is established, redirect automatic deposits towards retirement, education savings, or investment accounts. Think about setting aside specific amounts of money you receive, such as yearly tax refunds, specifically for saving.
#5 Back It Up
Safeguard your vital financial records and account details. This involves creating digital copies on a separate hard drive and ensuring an additional layer of security by backing up these copies in the cloud.
Pro Tip: Create a central "master" file that acts as a key, detailing the organization of your backups and the location of specific information. Enhance security by managing financial access passwords with a reliable password manager. This proactive reorganization will streamline your future financial reviews. Moreover, it provides a significant advantage for estate planning, enabling a designated executor to easily access all your digital assets and crucial information.
#6 Check In With Your Bigger Financial Goals
Assess your progress on both your significant and minor financial objectives. Where have you succeeded, and where are you lagging? Reflecting on your current standing, your past achievements, and your future aspirations can provide clarity on when and how to modify your strategies to ensure you remain on your intended path.
Pro Tip: Discuss your larger financial goals with someone. Getting feedback and a new viewpoint can provide motivation to help you stay committed.
Action Items
Financial clutter can accumulate quickly for anyone, regardless of age or wealth. Bills, statements, tax documents, policies, and agreements contribute to this overwhelming paper trail, causing stress and frustration, especially when time is wasted on basic organization.
Ignoring this clutter leads to procrastination and increases the likelihood of impulsive financial decisions, hindering the ability to focus on important matters.
To gain greater control over your financial well-being, make it a routine to conduct straightforward financial spring cleaning on a consistent basis, utilizing the provided comprehensive checklist to ensure no crucial areas are overlooked.
As a final step in establishing robust financial habits, explore the benefits of enlisting the support of a trusted individual with whom you can regularly connect to review your progress and maintain accountability. This collaborative approach can provide valuable reinforcement and encouragement in achieving your financial objectives.
~Alex
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