No better time for a financial house cleaning then tax time. Giving our finances a good cleansing can be easy, invigorating + even profitable.
“You do pay a price for your Financial Freedom, but it is far lesser than what you pay for a Lifetime Slavery.” ― Manoj Arora,
Tuesday, March 20th is the first day of spring and with that comes thoughts of spring cleaning. But in addition to freshening up your home in anticipation of the warm weather, it may be even more important to take some to time to spruce up your finances. Take a look at your long-term financial goals and make sure you are staying on track to achieve them. Even if you choose to revamp just a few of these you are still better off than you may have been! Here is where to begin:
What To Keep / What To Toss
Make sure to keep all tax returns. The IRS says they help with preparing taxes year after year. They are also proof you did your taxes incase there is ever a need to do so. Also they recommend to keep all the papers supporting tax returns if ever there is a dreadful audit. They generally will audit taxes within three years. But if they expect some type of errors or fraud they will go back as far as 6 years. So be sure to keep all supporting paperwork and deductions. This is all according to the IRS 🙂
If you have done any type of RE-FI always keep one entire set of closing documents from your last refinance, especially the HUD 1 which is the settlement sheet at closing. Also keep any letter stating pay off from an old mortgage. Consumer Reports goes into more detail.
Toss utility bills, receipts, reconciled bank statements, canceled checks, old newspapers and correspondence unless it’s really precious. If you have digital copies of receipts and such then you can toss the physical papers.
Get Out The Shredder!
With identity theft being at an all time high the last thing we want to do is just throw financial information in a trash can.
If you are in the market for a new shredder here is a great site to find the best one. Reducing paper clutter will help you stay more organized + will ease your mind. Did you know the IRS now accepts scanned receipts? Having those records available could come in handy in the event of an audit. Sort through your statements, pay stubs, bills and other financial records, and keep only the documents that are absolutely necessary. Since the IRS does have up to six years to audit you, keep your tax returns, canceled checks and receipts, and any records supporting your tax deduction for at least six years. If you’re unsure about whether you should get rid of certain types of receipts, scan them or make a copy, then go ahead and shred the rest. But don’t simply toss paperwork in the trash.
If you aren’t a shredder than you can always contact your local credit union to find out if they host an annual shred event.
Review Credit Reports
There are 3 credit bureaus you can check in to see how your credit is holding up. The FICO Score uses a numerical range of 300 to 850, where higher scores also indicate lower credit risk. This score is used by all three credit agencies. It is smart to check these even quarterly especially with the recent security breaches. Listed below are the 3 important agencies. You can even pay monthly to have your credit tracked + get alerts when there are changes both good + bad.
Freshen Up Investments
Yes it is important to track your day-to-day spending it is equally important to clean up investments in your retirement account and other long-term savings. No better time to adjust your holdings if they are no longer meeting your overall long term financial goals.
“It’s easy to forget that we need to perform periodic maintenance to ensure our investment allocations have not grown out of whack over the last year,” Carrie Houchins-Witt (A Certified Financial Planner™)
Financial adviser Mathew Dahlberg of mainstreetinvestments.com recommends rebalancing your portfolio to keep it fresh + current because as your life changes your financial long term goals may change also.
Receiving a big tax refund is always exciting but not always the best financial decision. The average federal refund is about $3,000 + with the new tax credit the federal average refund is going to go up a bit. This could put up to $300 a month in a savings account. If you are receiving a large check from the government this year, it may pay off to adjust your withholding on your W-4 form with your employer before next year’s tax season. Why not put it towards a 401(k) or an IRA
It is suggested to speak with a tax preparer to help determine the best choices for your withholding. The last thing you want to do is too little taken out of your paycheck for the rest of this year.
Rework Your Budgets
Spring cleaning isn’t only about de-cluttering – it’s also about regrouping to make everything in you life run a little smoother. This is the perfect time to shop around for new bank accounts with no fees or close the inactive accounts. Nerd wallet is a great resource for the best bank accounts with zero fees. If you have credit that reaches 600-800 you are probably bombarded with 0% interest credit card offers. Transferring balances is one of the most popular ways to save wasted money each month. If you need a little help remembering when to pay your bills you are in luck! There is a monthly budget sheet in your Ladypreneur Life Organizer + Day Director for both personal + business expenses. You can then set up automatic bill pay, and link it to your primary checking account. This will be a great way to clean up your budget! You can then reaccess your disposable income, live more within your means, + alot any extra dollars to other saving areas.
Now Feel Accomplished!
Be proud and feel accomplished as you clean up + rework your finances to stay on the road to your long term financial goals. Tweaking even a few little things helps clean up spending. Just cleaning up bank fees, cutting out a few coffee shop runs, +/or, transferring high credit cards to zero balances is a great way to redirect disposable income. Congratulations on not just spring cleaning your home but taking more responsibility for your financial future!
Purchasing a Ladypreneur Life Planner + Day Director you will be taking another step to not just financial management but overall life management! Because complacency isn’t an option 🙂
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