Spring is here. Your flurry of deep cleaning no doubt includes raids on closets, drawers, nooks and crannies, but it’s important to tidy your personal finances, too.
Spring-cleaning your finances can help you save money and track your progress while letting you feel more relaxed and secure about your finances.
- Where does your money go? Use this budget calculator to help you manage your spending and understand if you're falling short, breaking even or coming out ahead.
“When you’re dealing with disorganization, you can’t pinpoint exactly where you are financially in your life, because everything’s in disarray,” explains Varsha Singh, a Toronto-based professional organizer and the manager of operations and client care at ClutterBGone.
“We often find that clients are losing money because they’re paying bills late and paying interest that could have gone into savings.”
Ready to roll up your sleeves and get started?
1. Sort and categorize your finances
Setting up and maintaining an organizational system that works for you – paper, digital or both – isn’t as daunting as you might think.
Begin by sorting through your documents. Singh recommends creating broad categories to establish smaller and more manageable collections of documents. Some suggestions:
Next, purge. An easy way to prioritize which documents to hold on to, Singh says, is to decide how difficult they’ll be to replace. That signed mortgage statement is a must-keep. But the bank statement that you can easily download from online is probably safe to shred.
Once you’ve categorized and streamlined your financial documents, set up your storage system. A series of labelled hanging folders works best, says Singh. Store them in a filing cabinet or go for a more budget-friendly 32-litre file box. You can find either at most office supply or home goods stores.
As new documents come in, drop them in the appropriate folder. Once you set up your system, you’ll be able to find any document you need in 15 seconds or less.
- Want to prevent paper clutter from piling up throughout the year? Go paperless whenever you can.
2. Organize your digital files, too
An increasingly paperless world likely means you’ve got plenty of financial documents hanging out in your inbox as well. “Paper clutter has now become electronic clutter,” Singh says. The good news? There’s a good chance that the same sorting and categorizing steps applied to your paper documents will work for your electronic ones.
Use folders and subfolders in your inbox or cloud storage to keep track of your financial documents. Set up inbox filters to help automate the process – as long as you’re sure you’ll remember to review the incoming documents.
If, like most people, you’re storing both paper and digital documents, be sure your filing systems match. That way you can easily find what you’re looking for, regardless of which system you’re searching.
3. Take advantage of the seven-year rule
Tax season is a great time to reap the benefits of financial organization. It’s also another chance to cut the clutter.
“Because Canada Revenue Agency says we need to keep financial documents for seven years, a lot of people feel they need to keep all their receipts and documents for that long,” Singh says. “But the reality is that if we need to keep our documents for seven years, so do financial institutions.
So shred older documents that you could easily replace. Declutter old receipts regularly throughout the year, including at tax time. If the item is out of warranty or no longer returnable, Singh says you can likely ditch the receipt.
- Keep your receipts – paper or electronic – if you’re claiming these four caregiver tax credits.
4. Get help when you need it
If spring-cleaning your finances and setting up that initial system feels overwhelming, don’t be afraid to ask for help from a professional.
Look for an organizer associated with the Professional Organizers in Canada (or POC), advises Singh. The POC sets ethical and training standards to ensure organizers can help you sort through your financial documents safely. That way, your information will feel manageable and secure.
And once you’ve got your paperwork and digital files in shape, you may find it useful to speak to another professional to help you review your financial picture and check your progress on the road to financial security: