The Best Ways to Organize Your Finances After Taxes
So you’ve just filed your taxes. Ready, set, start getting organized for next year! Here’s what to keep, what to toss, and apps that ease the process.
Your taxes have been filed, your return (hopefully!) is on its way, and you're itching to book a fun vacation to reward yourself. Though sifting through the massive piles of bank statements, insurance documents, and important receipts you've accumulated throughout the year might feel like the last thing you'd like to do, a little effort in this department will pay off in dividends (especially when next year's tax season comes around).
Not sure what to save, shred, or digitize? Use this simple guide to declutter your finances and stress less.
What to Shred
If you’re one of the 54 percent of Americans who still gets paper bank and credit card statements, shred them (along with receipts and bills) annually after you’ve filed your taxes, says Andrew O. Smith, author of Financial Literacy for Millennials. Most financial statements are easily retrieved online for at least five years. When it comes to shredding the statements, choose a shredder that can handle multiple sheets and staples and paper clips. Try the Swingline Style+Super Cross-Cut Shredder, $189.
What to Save and Scan
Keep hard copies, scan, and hold onto vehicle titles, real estate or property records, and insurance policies for as long as you own them. What to keep indefinitely: birth, marriage, and death certificates; Social Security cards; health care proxies; and wills. Store hard copies in a safe-deposit box or fireproof safe. Save scans using a service such as CertainSafe (starts at $12 per month) or Dropbox (free for 2 GB of space). Consider the Epson DS-320 scanner, $250. It’s portable, and you can scan directly to an online account.
How to Go Paperless (the Safe Way)
Protect access to online financial accounts with a password you change every three months. Apps such as Dashlane (free for one device or $5 monthly for unlimited devices) or LastPass (free or $36 for the premium) help you do that. Keep a record of passwords in a safe place so your accounts can be accessed in an emergency, says certified financial planner Nancy Coutu, cofounder of Money Managers Financial Group in Oak Brook, IL.
Tip: Consider a separate email address for statements and bills, and review them monthly so you can spot fraud ASAP.
How Long Should Tax Returns Be Kept?
Stick with the seven-year rule even though your audit risk lasts only three years from the date you file. What qualifies as a tax record? Anything that's evidence of income (W-2s, 1099s), deductible expenses, or a tax credit (papers proving tuition or childcare payments or retirement-plan contributions). Also keep health insurance records.
Finance Apps to Keep You Organized
Take your finances paperless to help ease the load of physical documents that add up—and take up space on your kitchen table—with these easy-to-use apps!
Want to take the guesswork out of bill pay? Schedule and track payments, plus review accounts and documents from your smartphone, all for free.
Buy It: Doxo, Free, itunes
This is another free app that keeps track of donations, assesses the value of donated items, and allows you to scan all your charitable receipts.
Buy It: ItsDeductible, Free, itunes
A digital wallet where you can upload credit card info so it’s easily accessible—for $10 a month.
With these decluttering tips, you'll be able to downsize paper pileups, digitize, and get organized for next year. Trust us, your future self will thank you.