Along with cleaning your home or office surroundings in spring to get rid of the dust and clutter that built up over the cold months, it is also time for a financial spring cleaning for a fresh beginning post COVID-19.
So, what is Financial Spring Cleaning?
Financial spring cleaning refers to tidying up your finances, mainly by organizing necessary documents and shredding old documents, while moving to a paperless office. Take this opportunity to organize your personal finances. Document scanning services are available for bulk scanning of paper records and storing them electronically.
If you’re engaging in a little financial spring cleaning this year, consider these tips –
Keep an Eye on Your Budget and Spending
Along with maintaining a well-organized home or office, it is important to track your finances and keep them organized. Rather than implementing some strategies to attain objectives that are hard to achieve, it is better to commit to smaller improvements that can be easily increased over time. Make sure to define the priorities in your budget, as they might have changed over the past year. Take a look at your spending patterns last year, to establish your current budget and spending. Do not keep items in your budget that no longer fit your life. Track your spending and set the guardrails.
Shred Old Documents
Spring is the right time to clear your desk of paper clutter such as ATM receipts, old tax documents, loan papers and other documents and get your financial house in order. Go through your bank statements, pay stubs, utility bills, and receipts for medical expenses and keep only the documents that are necessary.
It is important to store certain documents for years, while others are of no use but only serve to consume your storage space. Go through all the documents you store such as bank statements and receipts for medical expenses, and keep only the documents that are necessary. Often, tax return data needs to be maintained for 3 years in case of an audit; so, make sure you retain these things. At the same time, supporting tax documents such as W2s, 1099s, or proof of charitable contributions should be kept for 7 years.
Scan and Save Necessary Documents
Instead of sorting through all those paper documents, it is better to go paperless. Scanning documents and converting them into digital format make it easy to store and access them. Digitization reduces data loss and supports better disaster recovery. Even if you are not sure whether to store or shred a document, consider keeping a scanned copy in your computer or the cloud. Opt for electronic bills. Digital documents can also be shared easily among staff or family.
Back up Those Important Documents
Instead of storing all the financial information files on your computer or mobile device, it is better to store them on an external hard drive or sign up for a secure online cloud storage platform. Devices may have to be repaired. So, it is important to download electronic copies of financial records to your computer and then back them up on a separate hard drive. Cloud storage tools like Dropbox or Google Drive can save your records on a secure platform.
Follow these spring cleaning measures to keep your finances organized and improve the prospects for meeting your important goals in life.
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