Out with the Old, In With the New (Pt. I)

Part I in an End-of-the-Year/ New Year’s Series on Getting Your Financial House in Order

For many, the end of the year can signal a time of reflection or a time to take down holiday decorations and tidy up in preparation for the new year. Why not apply this same energy toward organizing your finances?
Stock image of christmas ornaments in a box

Here are a few tips to help you get your financial house in order, and maybe you’ll even be ready to make some resolutions in 2019!

Review your net worth.
The end of the year is a great time to review your net worth so you can track and see how you are doing from one year to the next.

Don’t know how to calculate your net worth? Take the total value of all your assets such as your house, vehicles or other personal property, savings and other bank accounts and subtract any liabilities such as credit card balances, mortgage and loans.

Examine your budget.
It’s also a great time to review your finances in general, particularly your budget. Have you been living within your means or are there areas you can improve upon?

It may take some time to go back through several months worth of bills and expenses, but having an accurate idea of where your money is going and how much you are truly saving can go a long way toward reaching any future goals such as saving for retirement or for your children’s college education.

Check your credit score.
In addition to reviewing your budget and net worth, checking your credit every so often is also a good idea. This can help you to pinpoint why your credit score may have slipped (were you late on some bills for example) or if there are any errors that may need correcting.

What’s more, a credit report can often be the first indicator that you have fallen prey to identity theft.

You can request a free copy of your credit report from each of the three major credit bureaus by visiting www.annualcreditreport.com.

Purge and/ or organize old financial documents.Stock image of female cleaning underneath a Christmas tree
Do you have twenty years of receipts or tax returns sitting around collecting dust? If so, now may be a good time to tame the paperwork monster by throwing out or organizing old financial documents.

According to the IRS, the length of time you should keep a document depends on “the action, expense or event which the document records.” In general though, the agency advises keeping tax returns for three years from the date you filed your original return or two years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. For additional guidelines on what to save and what you can safely let go of, visit www.irs.gov.

For other financial paperwork, it may be time to part ways – especially if it’s been years since you’ve needed any of the information they contain.

If you’re paranoid about throwing out old paperwork, why not scan and digitize all those records? Many organizational experts recommend investing in a scanner and paper shredder. These tools can do wonders to help you tame the paperwork monster and stay on top of things in the years to come.

Plan for the future.
The end of the year is also a good time to plan for the future and that can include planning for your children or your grandchildren’s college education as well.

With a Future Scholar 529 College Savings Plan, for example, any contributions you make to your account are tax-free. Withdrawals are also tax-free as long as the money is used for qualified expenses.

If you file an S.C. tax return, you may be eligible for additional tax benefits and the good news is, you have up until the April tax deadline to claim an exemption on this year’s taxes.

For more information, visit www.FutureScholar.com.