Spring has arrived in Texas. I know this because my back is sore from raking leaves and clearing out gutters. For my family, this time of year is all about taking advantage of the nice weather with soccer games on Saturday mornings, bike rides, and trips to the park. While we enjoy the more fun family activities, the change in season is also a convenient reminder to catch up on necessary activities. Yardwork, testing smoke and carbon monoxide detectors, and replacing air filters. What does this have to do with finance? Regular maintenance is the key to keeping a house in good shape. In the same way, your finances need a few annual tune-ups. It might feel like a pain (like it did when I was doing yard work), but now is an excellent time to get a few essential items done to get your financial house in order.
Clear out the clutter
You should file and keep certain documents, like tax returns and statements for non-qualified brokerage accounts. However, it would be best to shred many of the financial documents you receive, like pay stubs and checks deposited online. Why shred? To protect your information. Yes, it’s an unfortunate reality that your paper documents are susceptible to identify theft, but you don’t have to invest in a commercial level shredder. Several micro-cut shredders are available through an office supply store for less than $100 – which isn’t a bad investment for the protection it provides.
For those who have gone digital with financial documentation, check your computer files or cloud drives to clean out what you need and permanently delete files you don’t. Many institutions can also archive your statements for years, saving time in managing documents and keeping them in a more secure setting.
Whether you’re clearing out physical or virtual clutter, it makes it much easier to find what you need in the future.
Annual credit report
Once every 12 months, everyone is entitled to a free credit report check at http://www.annualcreditreport.com. This is the only official website authorized by federal law. Be wary of any other services that pose as the official program and charge a fee. While your report is free, if you want to see your actual credit score, there is a cost at each of the credit bureaus.
Another place to get your annual report is with your current credit card provider or banking institutions. It’s becoming more popular for financial institutions to partner with the credit bureaus and give customers free credit monitoring and offer ongoing access to your score and annual report. It’s worth checking if you can sign up or if you already have it.
Annually reviewing your report can help you catch the signs of identity theft early or even discover and fix incorrect information.
From food subscription boxes to video streaming, this has to be the year of subscription services. Even before the pandemic, the average person in the U.S. had 12 paid media and entertainment subscriptions. If you live in a multi-generational household, that number could be as high as 17.
There’s a reason so many companies offer a monthly subscription or free trials. It’s easy to forget about it and not realize that you’re being charged month after month. Now is a good time to scroll through your expenses and see what subscription services are charging you each month. Either update the subscription level to an amount you actually use or say goodbye to the ones you don’t.
Check on your estate plan
First, make sure you know where your essential estate documents are located. Then, review them to see if they need to be updated. Is there a need to change any of the designations you’ve made? Also, be sure to look at your financial accounts because named beneficiaries on accounts or insurance will supersede anything written in a will. If there has been a significant life change (e.g., birth, death, or divorce), there may be a need to update your documents.
It may go without saying, but if you read this last item and said, “I don’t have an estate plan,” then your annual spring cleaning is more of a yearly to-do list. Having an estate plan is one of the essential items in your financial planning basket, as is having an emergency plan for the home.
This list is not meant to be exhaustive, but instead a few quick items to help keep your financial house in order after a particularly challenging year. If you run across any questions as you work through the steps, please reach out to your Financial Advisor for help.
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