Spring has sprung. I'm a big fan. There's something exciting about getting a fresh start on so many aspects of your life. This work-from-home thing has some advantages as well. My wife and daughter are out in the garage doing some spring cleaning, and with one eye watching the progress out there, I'm pounding away at the keyboard, very proud of their hard work.
As you work through your own spring-cleaning routine, consider putting the same effort that goes into your home and yard into your finances. The results may be powerful. Here's an easy-to-follow, three-step process to guide your financial spring cleaning: Trash it, stash it and rehash it. Let's take a closer look:
Trash it. If your garage, closet or attic is filled with every tax return and all the supporting documentation going back to your entry into the workforce, it may be time to lighten the load. The IRS says you should, as a general rule, keep records for only three years. If you have questions, go to www.irs.gov and type "how long should I keep records" in the search box. Also, ask your tax adviser if you have one. In addition to tax papers, thin out all of those old investment statements. With the availability of most documents online, there's a lot of paperwork that should be disappeared … is that a word?
Stash it. Having a solid financial plan stashed away is a positive. Bringing it out during tough times like we've experienced since the pandemic broke onto the scene is important. It can help you avoid rash investment calls, reinforce the need for adequate insurance and cash reserves, and just plain keep you on track. And since we are talking about stashing -- without cluttering -- it's a good time to assess your savings efforts. Take a look at bumping up what's going into your thrift savings plan (TSP), Roth IRA or your emergency fund. Consider increasing what you're putting toward credit-card or other debt. Begin to put money into savings accounts for any number of short-term goals as you "stash it" this spring.
Rehash it. No, not missed investment opportunities or Super Bowl LV (as a Chiefs fan, it still hurts!). Be proactive as you examine your finances from top to bottom. Are you saving the right amounts in the right places? Have you got a solid plan you're executing to eliminate your debt? Have you updated your wills and powers of attorney? Do your beneficiary designations reflect your current wishes? Have there been changes (new house, child, etc.) that should have caused you to look at your life insurance coverage again? What about your short- and long-term financial goals?
Let the fresh spring air be a subtle reminder to take a fresh look at your overall financial plan. This year, trash it, stash it and rehash it!
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