Posted by Irvine Sign Company
Posted by Irvine Business Sign Company
Spring is the season that we clean, organize, and purge our home of excess things. During this season we all begrudgingly sort through the past year’s receipts and statements while gathering data for our tax returns.
This task is often overwhelming because our finances are not organized. Are your receipts scattered about your home and statements piled high on your desk? If so, spend some time organizing your personal finances now while they are top of mind.
Take the time to do a bit of financial spring cleaning before the warm summer days convince you to forget about it until next year’s tax season.
Where do you begin?
— Start by making a monthly payment schedule. On this list include: company name, due date and amount due. This schedule would include estimated taxes, property taxes, insurance premiums and other relevant information. Use this as a resource to help with budgeting and planning for large expenses.
— Establish electronic billpaying through your bank for recurring bills. Set up automatic payments for your mortgage, insurance and other predictable expenses. Keep all bills that arrive by mail, such as property tax and insurance premium notices, in a designated location until they are paid.
— Schedule time to pay your bills. This may be weekly, biweekly, or monthly. During this time, read each statement to review for accuracy, pay, and then file — or throw away. For guidelines on what to keep, look at IRS Publication 17, page 16, at irs.gov.
— Implement systems to help you manage and save your important documents. This may be a manual filing system, three-ring binder, electronic scanning and storage, phone app, or a combination of a few methods. Find a system that works for you and stick with it.
— Invest in a good shredder so you can destroy statements and other correspondence that contains sensitive personal information to protect against potential fraud or identity theft.
— Open a safe deposit box or purchase a fireproof safe to store important documents such as birth certificates, marriage license, deeds, automobile registrations, estate planning documents, and passports. Tell your family members where these documents are stored and provide instructions for access in an emergency.
Prepare a budget
Begin by using the monthly payment schedule referenced above to identify your monthly expenses. Add to the list all additional discretionary expenses incurred over the course of a month.
A budget should record all the purchases we might otherwise forget about — expenses ranging from coffees at Starbucks to large annual expenses such as property tax. It creates a spending plan and provides a transparent snapshot of how you spend your money. It is a tool to assist you with living within your means by tracking all spending and with planning ahead for short- and long-term goals.
Once your budget is outlined, identify the changes that you can make to reduce your spending and debt. In addition to managing the outflow of cash, determine how you can increase your savings. This is key. Understand and implement these changes immediately, look for new opportunities to save monthly, and stay focused on your goals.
Consolidate, consolidate and consolidate
Do you have more than one checking, saving, retirement, or brokerage account? Do you need more than one of each account? Can you combine like accounts? Simplify by consolidation.
It will save you time by eliminating the need to review and file the statements for the excess accounts. Consolidation creates efficiency when preparing data to file your income taxes. Fewer accounts mean less statements to sort through, which equates to more time, focus, and energy to spend on things you enjoy.
Don’t forget about the credit cards. If you can’t easily consolidate or close cards because of outstanding balances, review the debt and interest rate of each credit card. Organize this data on a spreadsheet, including balances, payment due dates, and interest rates. To eventually close excess cards, focus on paying off the cards with the highest interest rates or lowest outstanding balances first.
Review your beneficiaries
When was the last time you reviewed the beneficiary designations on retirement accounts and life insurance policies? Even if you have not had any significant life changes such as a death, divorce, marriage, or birth, you should periodically review these designations. Life changes, and we do not always remember to follow up when it does.
Mortgage
If you are not aware of the terms on your mortgage, review your statement so you know the balance, interest rate, and remaining term of the loan. Does it make sense to refinance or make accelerated payments to pay off the mortgage prior to retirement? Know your options.
Communicate about finances
Plan time to talk to your partner about your finances. This may be monthly when reviewing the budget, semi-annually or annually. During this time, talk about income, expenses, savings, debt, and short- and long-term goals. Is your net worth growing or shrinking? Financial reviews are critical to address where you are now financially—and to make adjustments to stay on track for the future.
Teri Parker CFP® is a vice president for CAPTRUST Financial Advisors. She has practiced in the field of financial planning and investment management since 2000. Contact her via email at teri.parker@captrustadvisors.com
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