It may not feel like spring with the latest snow fall, but this coming weekend we will change the clocks to spring forward towards summer!
The new season has arrived and magazines are full of articles about spring cleaning and decluttering our lives. The resolutions and organisation goals that we set in January are a distant dream and now is the time to get a real grip of the year ahead especially in relation to our financial affairs.
Spring is the season of new beginnings and spring cleaning is one of those things that we do to help get our lives back in order. But it can take a long time if not approached with a solid strategy.
Here are Magenta’s 5 tips to spring clean your finances and have a more organised financial outlook:
Budget
A great way to freshen up finances this spring is to have a look at your budget. You may have set a budget in January and if so it needs checking and probably revising.
If not take a look at the Which Guide to budgeting for some great ideas.
Don’t be daunted by this – it simply involves writing down all your income and what you spend.
This could go a long way in helping you gain a better perspective on how money is being made and spent and help you get a better grasp of what needs to be done to ensure that you have a great financial year.
Know how long to keep paperwork
Most of us dread dealing with the paper clutter that arrives in the post and lies in an ever growing pile on our desk or kitchen table. It would be great to throw it all away, but we all fear getting rid of important documents that we may need later on.
A simple rule that we work by is that if you can obtain the paperwork again (eg a bank statement) then you don’t need to keep it indefinitely. The bank will have a copy and most accounts are now online anyway.
You should keep anything relating to tax for at least 6 years and probably get rid of most everything else.
If you are still worried about what you should keep, then buy a scanner and scan what you think is important before getting rid of anything – or use the Magenta client portal with DocSafe!
Make sure you shred your financial documents rather than putting them in the rubbish bin. That way you are protecting yourself from possible identity theft.
Organise all financial paperwork into files/categories
Once you have disposed of unnecessary paperwork, you can create a system where you file away all your important financial paperwork such as receipts, guarantees, insurance policies, bills etc.
Here are a few files or categories that you should consider creating:
- Household bills
- Insurance
- Taxes
- Loans/Mortgage
- Cars
- Guarantees/warranties
- Rental Income
- Investments
- Legal documents (eg Wills etc)
A simple box file should be sufficient for each category which should be emptied of old papers each year.
Designate an area for working with all things ‘Financial’
This will include things like payslips, expenses, debts, bill payments. This is designed to make ‘money matters’ as simple as possible. Do not use your finance area as a place to store unrelated books and magazines, the children’s toys etc. You will quickly destroy its effectiveness.
A desk is ideal, but an “in tray” in a kitchen cupboard is fine as long as you deal with the incoming paperwork regularly and file it appropriately in your financial area. Try and take some time each week to organise it, if necessary and file things away.
Designate some time every week to look at your finances – and make it a habit!
This way you will always be on top of your financial planning. And most importantly, all your files will remain up to date throughout the year. On average, it takes more than 2 months before a new behaviour becomes automatic — 66 days to be exact – so stay committed and over the years it will become a habit and normal to be organised with your finances!
Magenta is very good at helping clients to organise their financial affairs most efficiently. If you need help, please feel free to call for a friendly chat.