Although spring is traditionally the time to clean house and start anew, you may find a fresher start this season by giving your finances a little dusting off. A year of spending and saving can leave a cluttered trail of financial paperwork in need of some fiscal organization.
"There is an emotional peace to being in control of your finances," says Leeds. "Creating a budget and cleaning up your files can show you that money is not complicated."
1. Build a budget
Start your financial spring cleaning by building a simple budget.
"Add up your expenses for the entire week, multiply by 52, and see what you get. Are your expenses for the next year likely to outstrip your income for the year? If so, you need to do some figuring out," says Leeds.
"In just one week, you can create a budget for yourself that can stop the bleeding, and set yourself on the path to financial fitness."
Be sure to categorize your expenses to see where your money is going and where balance can be found.
2. Cut through your costly clutter
The next step is to take a look at the physical area where you work on your finances.
"If it's in chaos, guess what? Thinking clearly is going to be really difficult! Set a timer and give yourself 20 minutes to move as fast as you can," says Leeds. Here's how to cut the clutter:
- Trash or recycle as much of the debris as possible. Likely candidates include: magazines older than 2 months and newspapers older than 2 days, invitations for past events, and receipts for items that do not represent a tax deductible purchase. Use a shredder for sensitive documents.
- Take items out of your office that belong elsewhere in the home. Remove all plates, cups, shoes, and clothing.
- Set up a financial file system. Use simple three-ring binders, folders, and a label maker to organize your bills and bank statements. Knowing where to find your unpaid accounts can save you time and money.
Leeds, a professional organizer since 1988, has seen her share of paper clutter. If you have many boxes of paper in need of shredding, she suggests taking it to a professional. "A service is cheaper than you spending your time to do it," she says.
3. Cash in on savings
Perhaps the best part about spring cleaning your finances is finding places to save money. "There is always a better deal to be had with some of your providers like cable or phone," says Leeds. Selling your clutter for cash through garage sales or on eBay can also help you give this spring a fresh start.
Your Turn: Got a tip for sorting through financial clutter?
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Just make sure you don't shred too much! I can't remember the precise rule but know that you must keep for tax purposes a certain # of years of records. I think it is 3 or 5.
Happy cleaning!
Posted by: K | 03/23/2010 at 12:45 PM
It's almost hard to believe, but cleaning up physical clutter really does help you organize your financial life.
I try and keep all records on my computer, where they're fairly well organized. With the start of the new year though, I cleaned up my home office where I do a lot of my work. I found several receipts that I needed for my taxes, a bill that was *almost* due, and $20 in cash!
Being better organized will most certainly save me some money over time, and I definitely feel inspired to continue keeping my finances well organized.
Posted by: Brian | 03/23/2010 at 12:33 PM
I just followed Leeds' advice and cleaned out my office using her 20 minute rule. Looks like I need a paper shredder. Great post Kerry!
Posted by: Beth | 03/23/2010 at 12:23 PM
:This is very good info to FOLLOW by even though it seems like common sense. Its alot harder to be aware of what you can do! Thanks Kerry!
Posted by: Grant | 03/23/2010 at 08:35 AM