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5 Steps to Declutter Your Finances and Tax Records

Confused about what tax records and financial paperwork you need to keep and for how long? Money Girl Laura Adams helps you declutter your financial life, manage your tax records, and stay organized in 5 easy steps. 

By
Laura Adams, MBA,
Episode #579
5 Steps to Declutter Your Finances and Tax Records

Step #2: Go as Paperless as Possible

Outside of the important documents that I just outlined, the rest of your data and documents can be electronic—including your taxes. Going paperless, or as paperless as possible, will save space in your home, help the environment, and keep your data and documents safe from theft, fire, or water damage.

I recommend eliminating all incoming paper, such as bills, account statements, and receipts. Doing that will drastically simplify your financial life and help prevent identity theft.

When you receive paper documents that you can easily find online, such as a utility bill, a bank statement, or an insurance policy, don’t keep them. After reviewing the information, destroy any document that contains personal information with a cross-cut shredder that turns it into confetti.

However, some financial institutions may only offer free access to online documents for a limited period of time. If you need them later on, they might not be available or you might have to pay for access, which is why it’s easier to save them as you go.

Continually pare down what you receive each month. Every time you open your physical mailbox and see paper inside, make a note to log on to your online account or contact the merchant and request to go paperless, when possible.

Every time you open your physical mailbox and see paper inside, make a note to log on to your online account or contact the merchant and request to go paperless, when possible.

If you get a lot of junk mail for pre-approved offers of credit or insurance that you don’t want, you can opt out at optoutprescreen.com. This is the official, centralized site where you can choose to be removed from offer lists maintained by the nationwide credit agencies.

Remember that as you make the transition from paper to e-documents, you can always print out digital versions when necessary. And don’t wait to go paperless until after you deal with your existing paper. You can pare down your existing files later.

Just get started now with a zero-accumulation rule. Create a streamlined digital system that’s simple to maintain going forward.

With a paperless system in place, you'll probably find that you only need a small drawer for your essential files.  You’ll feel great about saving time, space, and cutting clutter in your home.

Step #3: Use Online Bill Pay

Once you’re in a routine of processing your incoming documents digitally, it’s time to focus on outgoing documents, such as your payments. I hope you’re not still buying, writing, and mailing any paper checks.

Not only are paper checks costly and time-consuming to write and mail, but they can be stolen from your mailbox or at the receiving end.

Just about every large or small bank or credit union offers free online bill pay. You can enter any company or person with a mailing address and the service will send money electronically or print and mail a paper check for you. It’s like magic!

Remember that you generally never need to keep household bills and credit card statements as paper. Digital bills and payments are safer and faster than relying on snail mail.

Digital bills and payments are safer and faster than relying on snail mail.

And as I mentioned, you can always print or save a digital copy if needed for tax purposes. That might be the case if you have a home office, for instance.

For recurring bills, such as rent or a car payment, you can set up automatic payments or enter them manually every month. Many banks can request e-copies of your bills and act as a centralized hub for all your necessary payments. At a glance, you can see your pending payments, what your balance will be after payment is deducted, and the payment history for each of your bills.

You can create customized email alerts to inform you when a bill has arrived or to remind you about the due date. That’s a handy way to make sure your bills are paid on time, so you eliminate late fees and boost your credit score.

Additionally, consider other transactions you can put on auto-pilot, such as transfers to savings and retirement contributions. Let technology give you a leg up so nothing falls through the cracks.

Another key banking task that you can simplify is making deposits. If you can’t get funds directly deposited into your account, deposit paper checks remotely. There’s no need to make a special trip to a bank.

Most bank apps have a remote deposit feature that allows you to use a mobile device to snap a picture of the front and back of the endorsed check and hit the deposit button. Doesn’t get any easier than that!

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