Declutter Your Financial Life

Misplaced bills, late payments and forgotten invoices can cause plunging credit scores, penalties and unnecessary stress. Protect your money—and prevent a headache—by ringing in the New Year with a resolution to organize your finances.

File as you go. It’s tempting to stack mail and other documents in an “I’ll get to it later” pile – it’s time to break that habit. Open your mail the day you receive it and determine if the contents need to be filed or can be tossed.

Store important documents properly. Hard-to-replace documents such as vehicle titles, stocks and bond certificates, and property deeds should be kept in a safe-deposit box. Store other files in a filing cabinet or box for easy access and organization. Arrange the files alphabetically by category, and separate them into “permanent” and “active” sections. Keep documents that are completed but need to be accessible—such as tax records—in the permanent section. Items that still need action—such as bills—go in the active section.

Discard old documents. Sort through your files at least once a year and dispose of or shred any unnecessary documents. Move paperwork that is inactive but needs to be retained to the permanent section of your files. Learn more about which financial records you should keep and which you can toss online, or check out this partial list here:

• Outdated warranties
• Outdated instruction manuals
• Outdated wills or trusts (provided you created a new one)
• Canceled insurance policies
• Credit card statements for closed tax years
• Canceled checks for closed tax years
• Old brokerage statements for closed tax years (unless they have cost-basis information you might eventually need)
• Old annual reports from stocks and/or mutual funds
• Old investment newsletters (some people keep these things for years because they paid for them—let them go)

Cut down on mail. Reduce the number of statements that arrive in your mailbox by signing up for as much paperless billing as you can. Also consider cutting back on the number of credit cards you have and consolidating financial accounts, if possible. The fewer individual bills you have, the less time you will spend organizing and writing checks to settle them.

Pay bills online. Clear your desk and improve your recordkeeping by shifting payments from paper to electronic. Online account and banking services allow you to track activity, pay bills and transfer funds on your own time, wherever you are. And many online banking services let you download your transactions to your financial management software.