I like the idea of spring cleaning my finances. My number one tool is to sort through my paper piles and other clutter. I have found financial records by dusting, sorting and filing. My second tool is a pen-and-paper and a laptop, which I use to track my finances.
These following tips about spring cleaning your money are from a subsidiary affiliated with a major bank. I'm neutral on the institution, but I like their information. Here are their tips:
1. Gather your financial records. Pull together your financial statements (e.g., bank, credit card, brokerage), your insurance and legal documents (e.g., life insurance, will, healthcare proxy), and your personal records (e.g., birth certificate, marriage/divorce certificate, property deed). Create a filing system and put a copy of your important papers either in a fireproof box at home, a bank safe deposit box, and/or with a trusted lawyer, relative, or friend.
2. Get the big picture. Use your financial statements to calculate your net worth, which will tell you the difference between what you own (assets) and what you owe (liabilities). Once you have a picture of your overall net worth, determine your cash flow, which will help you identify areas where you could be saving and/or investing more.
3. Set financial goals. Short-term goals are those you’d like to accomplish within one year (e.g., pay off credit cards); mid-term goals, within 5 years (e.g., make down payment on a new home); and long-term goals, 5 years or more (e.g., save for retirement). Write these down to help you clarify and prioritize your financial goals.
4. Allocate your money. Once you know your financial goals, allocate your money accordingly. This will help you determine how realistic your financial goals are, how long it may take to meet them, and what adjustments you may need to make now to achieve your goals in your desired time frame. Review expenses monthly and evaluate your progress regularly.
5. Check your financial reputation. Your credit score is a picture of your financial health in the eyes of lenders. Check your credit reports as they could have errors or discrepancies that could limit your access to credit. Resolve any errors and if you have any over-due payments, work towards paying them down as soon as you can. The three organizations that issue the most commonly referred to credit reports are: Equifax (www.equifax.com), TransUnion (www.transunion.com) and Experian (www.experian.com).
6. Protect yourself. If you don’t have a will, living will, or health care proxy, speak to an attorney to help ensure that your assets are handled according to your wishes. Dealing with these issues today can help you and your loved ones breathe easier in the future.
7. Stay informed and engaged. Periodically review your goals and objectives at least once a year, as they will likely shift over time as life circumstances change." --source: Lisa Caputo and Linda Descano of Women & Co.
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