Time for a financial spring cleaning

  • Nancy Doyle

    Nancy Doyle

Posted1/5/2017 1:00 AM

The start of the new year is the perfect time for a financial spring cleaning. Just like when you go through your closet to determine what to keep and what to donate, you can do the same with your financial life.

Get ready: Designate a room or an area of a room for your work. Set out a staple remover and stapler, sticky notes, pencils, paper clips, and file folders as well as bins for recycling and documents to be shredded.


Gather your information: Gather all documents and papers relating to financial, tax, legal, and health care matters, including bank, financial, and credit card accounts; insurance; mortgage, car loans, student loans; rax returns; birth certificates, marriage certificates; wills, trusts, and powers of attorney; medical and school documents for you and your family; and information related to your home and major purchases

Determine what to keep: It is time to sort and determine where to keep essential information and what to recycle or shred. For online files, keep a log of what you have sorted through. Here are some general guidelines:

• Keep tax returns and all supporting documents for seven years after the filing date.

• Keep all bank statements and credit card annual summaries for seven years.

• Keep a record of every new investment for as long as you hold the investment to track the original cost basis.

• Keep year-end statements for each investment account as long as you own the investments in that account and shred monthly statements once you receive year-end summaries.

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• Keep receipts for any major purchases and for all things that are insured as long as you have the item.

• Keep all records related to a home purchase and sale and any improvements that affect the home's cost basis, or the original price of the home plus the cost of modifications that enhance the home's value, indefinitely.

• Keep indefinitely mortgage agreements (including payoff notices), car loans (and payoff notices), and documentation for any other loans.

Implement a system for tracking data: Next develop a system for keeping track of your financial life.  Your system can incorporate paper file folders or electronic files, or preferably, your system uses both. Make sure that your information is secure, and password protect computer files.

Make a separate folder for each of the following: Current year taxes; bank accounts; investments (one folder for each account); health insurance; other insurance policies (a separate folder for home, auto, life, and disability); house; cars; and big-ticket items (receipts for appliances, jewelry, or art and any appraisals or notes about inherited items);

Ceate a folder system for your nonfinancial life. These files could include: Kids' schools (one folder for each child); kids' activities (program schedules and information, waivers, etc.); health forms (extra copies of physical forms for camp, sports, etc.); trips (upcoming travel and information on past trips as a reference)

Organizing your financial life might take more effort than organizing other areas of your life, but the rewards can be enormous. Developing a system to organize your financial life for the everyday and for the unexpected is a significant accomplishment.

• Nancy Doyle of Winnetka is founder of The Doyle Group and author of "Manage Your Financial Life: A Thoughtful, Organized Approach for Women."

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