Spring Clean Your Finances

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By Courtney Gonzalez

 

The urge to shed winter apparel and clear out last year’s clutter is here. At the top of that list should be a thorough clean of your finances.

Set Up a Budget
Fancy, traditional, electronic – whatever keeps you on track with your money is all you need. A flexible budget is the first step to financial cleanliness.

Balance Your “Checkbook”
In the olden days of dial-up and pagers, most people lived and died by their checkbooks. Writing a check or using cash was way more common than making a purchase on a debit card. These days all you need is an online banking portal and whatever method you use to budget. You should check your accounts at least once a week to verify purchases you’ve made were pulled out of your account and, more importantly, keep an eye out for fraudulent ones you didn’t make.

Be Aware of Your Credit Score
Your credit score is the number by which you will be financially judged throughout your life. A low credit score affects your ability to obtain lines of credit and loans. Keeping on top of your credit score should be a must, especially if your score drops without activity on your end. That’s a good indication there could be a falsely reported account. Generations members who have a My Advantage Checking account can get an updated credit score for free every 90 days or whenever new activity occurs.

Know Where It Comes, Know Where It Goes
Make a list of every place you gain income – your job, side business, interest-bearing accounts – and where you owe it – an auto loan, mortgage loan, etc. Included in this list should be any financial accounts you have. Try not to get into the weeds too much with bills like water, electricity, or subscriptions because those are not really debts and don’t have a date of payoff; they’re considered services. Having this list should help the next time you need to make a decision about opening a future account or line of credit. It’s important to update this list as your debt and income changes.

Save For The Future

Open a retirement fund. If you don’t have one sponsored through your employer, there are many financial institutions that offer retirement accounts. This is money you should not intend to touch until you are ready to retire. Not sure where to start? Generations has a Financial Advisor that can guide you through the retirement planning process.

Save For Now
Ideally, you should have an additional savings account (with a decent yield of yearly interest) for emergencies and payments on big ticket life items. This is a fund you can dip into when you deem it appropriate, but not one that shuffles money like your checking. The first rule of personal finance is to always pay yourself first. Take a percentage of your paycheck you feel comfortable with and immediately put it into your savings account. If you’re paid at regular intervals, most accounts allow you to set up a recurring automatic transfer. Generations has a Preferred Savings account with an APY of up to 3.03%, which you can learn about here.

Actually Spring Clean Paperwork
It’s a daunting task to go through your financial paperwork and decide what to keep. Here are a couple of helpful tips on what to save, how long you should save, and the best methods of backup.

  • If possible, store your paperwork electronically. You can do this easily with a physical scanner or scanning apps on your phone.
  • Don’t trash your tax returns – those are keepers and should remain in your possession forever.
  • The IRS generally won’t go back further than 6 years, so any documentation you have to support deductions you took (receipts for work travel, home loan documentation, or medical paperwork) should be kept for at least that time frame.
  • Any paperwork you have that supports an insurance claim is up to the individual insurance companies. You’ll want to ask your auto/home insurance providers what you should keep and how long you need to keep it.
  • Go paperless for bank statements. You’ll save yourself the effort of cleaning up a bunch of paper, and save your bank the money on printing it. Make sure you know how long they store your electronic copies in your account – if it’s for a year or less, you may want to download them yourself and keep backups.
  • Backup your financial documents and keep them secure. If you store them on your computer, periodically copy them to a USB flash drive. If you store them online in an account like Google Drive or Microsoft’s OneDrive, make sure your privacy settings are locked down and that your password cannot be easily guessed.