Bears Business Brief: Financial spring cleaning

By: James Philpot

Springtime brings hope, energy, and a chance at a new start. Our annual spring cleaning embodies and empowers these ideals, as we tidy our homes and purge our garages in anticipation of summer. Have you considered performing a spring cleaning of your finances? In this week’s column I begin a two-part discussion of how we can harness our spring energy to organize, update, monitor, and improve our finances.

Purge the paper. As you are doing your regular cleaning, clean out your financial files. Generally, account statements need only be kept 3-5 years—longer only if you still own a security included in that statement and need to prove a tax basis. Those warranties that are clogging the file cabinet can be thrown away as soon as the warranty has expired or when you no longer own the warranted item. If you are having difficulty parting with the paper, consider alternative storage for your records. Try scanning your account statements and saving the images to the cloud or to a drive on your computer. Better yet, sign up with your bank, broker, and other financial institutions for paperless accounts. You’ll receive e-mail notices of new statements, and you can view your archived statements online; and, many financial institutions offer lower fees and/or other incentives to paperless customers.

Record and store passwords. If you are like me, you have more password-protected online accounts than you can name offhand. If you are doing things right, each one has a different and somewhat complex password. Try organizing your passwords into a spreadsheet or word processor file with a line for each account. For example, you might have something like “Delta Airlines Myemail@xyz.com Pass*135” for a frequent-flyer club. If you are worried about security for this list, you can password-protect the list document.

Review your loyalty clubs. Do you have enough points or miles for a free hotel stay or a free flight? Checking your loyalty club balances can answer this question and the more important question of whether you have expiring points/miles. You might also compare each program’s terms to its competitors’ to find the best club for you. Finally, some loyalty clubs will cancel your account after a certain period of inactivity. Better to use the points than to lose them.

Clean up accounts. Sometimes financial accounts themselves can pile up like the statements they generate. Do you still regularly shop at that store where you saved $300 by signing up for their credit card? Do you own five mutual funds with the same investment objective? By consolidating and closing redundant and unneeded accounts, you can simplify your finances and spare yourself clutter going forward.

Review your large personal property. That boat, golf cart, motorcycle, or [insert your toy here] once was the apple of your eye and the center of family fun, but when was the last time you took it out? Often these large toys either outlive their appeal or are outgrown by their families. Spring is the time when people start looking to buy these things, so making the parting decision now can put money in your pocket and possibly save you money on future taxes, insurance, and storage fees.

Feel better? This is a very good start. In next week’s column I will discuss spring cleaning tasks specifically related to improving cash flows.

Dr. James Philpot is a Certified Financial Planner® and is Associate Professor of Finance at Missouri State University. Statements in this column are intended for educational and informational use only, and are not to be construed as investment advice.

This article appeared in the June 4, 2017 edition of the News-Leader and can be accessed online here.