Spring Clean Your Financial Records: 3 Strategies for Success


By Caroline Wetzel, CFP® I , MBA, AWMA®


s April a breath of fresh air for you? Do you look forward to temperatures rising and chirping birds resuming their seasonal singing? Are you inspired to get moving again and do a bit of spring clean- ing? Use this month to organize your fi nancial records! As a recovering “state- ment squirrel,” I can attest to the peace of mind that an organized approach to fi nancial records provides.


For years, whenever I opened a piece


of mail, I’d feel tightness in my chest and a knot in my stomach as I wondered, “How important is this?” “Do I need to keep this?” “How long do I need to keep this?” I man- aged this anxiety by keeping as many papers for as long as possible hidden as discreetly as possible. In my fi rst apartment, I shoved important documents in a special storage box in the bottom of my bedroom closet. Then after I married another statement squirrel, my husband and I bought a couple of fi ling cabinets and a fi re-proof safe to store our respective and combined piles. Over time, he and I began using electronic storage to scan and retain everything, though we were inconsistent doing it.


No matter what I did, inevitably every


month I’d discover (at least) one paper gro- cery bag of “important papers I need to go through when I have a few minutes,” and I’d worry that I was missing something. I learned from trusted friends who were “tornado trash- ers,” that they worried, too. In their compul- sion to get rid of documents, they wondered if they were managing their records “right." Today were they keeping the items that mattered? Tomorrow would they regret the documents that they shred?


CATEGORY Immediate Files Intermediate Files Forever Files DESCRIPTION Items from the past year


Items you monitor for multiple years


Items you oversee forever or until they change


If any of this resonates with you, here are


three steps you can follow to increase your control managing your fi nancial records and decrease your stress:


1. Understand the purpose of each document.


Different fi nancial records serve different purposes. For instance:


• Budget monitoring and management: pay stubs, bills, and bank account statements provide clarity on day-to- day spending. You can use these to monitor and adjust your behaviors, live within your means, and pay off debt.


• Financial and tax planning: investment statements, insurance policies, tax returns and supporting information, ongoing debt obliga- tions (mortgages, student loans, etc.), and fi nancial plans prepared by your Certifi ed Financial PlannerTM


EXAMPLE


Budget monitoring and management records


Financial and tax planning fi les


Estate planning documents


• Estate planning: trusts, wills, health care proxies, and powers of attorney documents. You can use these to stipulate the people and processes to protect and execute your wishes when your life as you know it changes.


The next time you read a fi nancial record, think of which purpose it fi ts. You may fi nd that in time, and with practice, this approach makes reviewing the paperwork more intuitive and less burdensome.


2. Organize your documents according to how you use them.


. You can


use these to understand what you own, what you owe, and what’s cur- rently available to you to pay for your fi nancial goals over time.


As you begin to look at your fi nancial documents according to the different pur- poses that they fi ll, it becomes easier to orga- nize them according to how you use them. Consider keeping “short term” items together and “long term” items together, and bucket them into one of three categories according to when you need to access them:


3. Follow a simple process that works for you.


After organizing your fi les into catego- ries according to their purpose and when


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