Reducing your financial clutter is one step in the process of gaining control over your personal finances and becoming more organized. What’s more, it also provides a way to review and ensure you are taking adequate measures for information security.
Here are five steps to reduce your financial clutter that we often share with clients:
#1: Decide what to keep
There are some items we encourage you to keep forever. To reduce the financial clutter, you may want to keep these items in a safe-deposit box and also take pictures of the hard copies with a smartphone. See our discussion below for storage of electronic files.
- Birth/death certificates
- Employer defined-benefit plan communications
- Estate-planning documents (don’t forget to give copies to your advisor and executor)
- Active life insurance policies
- Marriage licenses/divorce decrees
- Military discharge papers
- Safe-deposit box inventory
- Social Security cards
- Pension documents
#2: Decide what to discard
Keep these guidelines in mind for the following items:
|When to discard
|Bank deposit slips
|After you reconcile your statements
|After a calendar year; store with tax returns if you rely on them to prove deductions
|Brokerage, 401(k), IRA, Keogh, other investment statements
|Monthly and quarterly statements as new ones arrive; hold annual statements until you sell the investments
|Credit card bills
|After you check and pay them, unless needed to prove any tax deductions
|After you no longer own the household items
|After you renew, cancel, or surrender the policy
|Hold until you’ve reconciled with statements; then should be archived on statements
|After you sell the property or vehicle
|After you reconcile them with your W-2; save year-end pay stubs for seven years
|After you reconcile them with your credit card/bank statement, unless needed for a warranty or tax records
|Social Security statements
|When you get a new statement; set up your account online for an electronic archive
|Tax returns/supporting documents
|After seven years
|After you sell the vehicle
In the spirit of information security, shred hard copies of what you don’t need.
Strive to move toward electronic statements for items you currently receive as hard copy. You can keep electronic versions, as well as any scanned items, in an online secure vault. For online files, delete those that are no longer necessary to keep. As part of the firm’s financial planning software, MPPL clients have access to an encrypted vault to keep backups of that data.
#3: Take an inventory of important information
Consider these essential items:
- Using your smartphone, make a video of your home. Document both the inside and outside of the home. Don’t forget your garage, vehicles, and other structures such as an in-ground swimming pool or shed. Photograph new possessions and record their value.
- Keep a list of all your financial accounts, life insurance policies, credit cards, and safe deposit boxes for your survivors in the event of premature death. This list should also include essential contacts such as your financial advisor, CPA, attorney, etc.
#4: Put a backup plan in place for electronic records
After you scan or download your records, don’t forget to create a backup on a separate hard drive or cloud storage system to prevent future data loss, if you are not already a MPPL client using the encrypted online vault the firm makes available to its clients.
#5: Regularly review your accounts
- Consolidate your bank and brokerage accounts, closing any inactive or redundant ones.
- Shred any unused checks. This is also a good time to examine the banking fees you pay and shop for other options that would reduce or eliminate these charges.
Investment Advisory Services offered through Midwest Professional Planners, Ltd. (“MPPL”), 2610 Stewart Ave., Ste. 100, Wausau, WI 54401, 1-800-236-6775, an SEC-registered investment advisor. Certain representatives of MPPL are also registered representatives of, and offer securities products involving commission or transaction based fees through APW Capital, Inc., 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866, 1-800-637-3211. Member FINRA/SIPC/MSRB. MPPL is independent of APW Capital, Inc. Registration with the SEC or State Regulatory Authority does not imply a certain level of skill or expertise.