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  • Writer's pictureJohn Caserta, MSFS, ChFC®

Cleaning out Your Financial Junk Drawer

Over the years, people make countless financial decisions, often with different people under different circumstances. And the end result is often a “financial junk drawer” – a collection of financial products purchased over the years without a cohesive plan.

Q: So how do we end up with these “junk drawers”?

A: Money touches many aspects of our lives. Take a moment to think of how you handle your debt, insurances, legal documents, savings, investments, taxes, etc. – not only are you dealing with different financial aspects, but you’re also dealing with different people. It can get complicated (and in some cases painful), so naturally we’re inclined to avoid it; but like anything else, avoidance can lead to problems in the future. We know staying on top of your money – and everything it touches – can be time-consuming and for many of us, it’s the last thing we want to think about when we have some free time. However, working to organize it could help tremendously.

Q: What do you often see in these “junk drawers”?

A: Sometimes it’s actual drawer (or shoe box, or envelope, or shopping bag) with actual documents, old statements, mail, etc. Other times, we may have it all organized, but we don’t know why we even have it in the first place. When we talk about the financial “junk drawer”, we think more about the financial stuff we’ve accumulated over the years.

o Benefits from work

o Insurance policies

o Investment accounts

o Bank accounts

o Etc.

Remember, it’s important to understand that while the products themselves may not be junk, what makes it a junk drawer is more the fact that it’s just a collection of financial products; and most people purchased those products with great intentions thinking they wanted to do “the right thing”.

Q: What tips can you provide on not only cleaning out your financial junk drawer, but also avoiding it in the future?

A: Cleaning! Schedule a recurring time to do it (and write it down so you don’t forget). If you have a partner that you share finances with, make an “date” out of it. Start by taking inventory. Write down where everything is and what it’s worth and think about the reason for making the decisions you made in the past

It’s ok if the answer is “I don’t know” because that might be the first indication that you need to make a change. Also, make a list of important professionals in your life, such as, accountant, attorney, doctors, financial advisors, insurance agents, investment advisors, etc. Try to use a system to track. For some, we see pen and paper, for others it’s software, and for some it’s even working with a financial professional, sometimes even a combination of things

Avoid cleaning this “junk drawer” out in the future by setting aside time. For example, John likes to deal with all his financial “stuff” on Friday mornings; from opening mail from the week, paying bills, checking statements, etc. Something to take away from all of this is that when deciding, ask yourself the following:

§ Why am I doing this?

§ How does this help me?

Try to work with a professional that can help you look at the big picture and keep track of everything.

Q: If we are cleaning out a physical drawer – or shoebox or shopping bag – what do we keep and what do we toss?

A: There is a good general rule of thumb to follow. If it’s documentation that verifies information on your tax return, you’ll want to keep it three to seven years. In general, the IRS website says you should keep records 3 years from the date you file the original return or 7 years if you file a claim for a loss from worthless securities or bad debt. Keep utility bills for a month and then shred or destroy them. Try keeping a spreadsheet of payments and confirmation numbers if that helps. Keep pay stubs for about one year. Ultimately, you can always store these electronically but make sure you’re doing so securely.

What are some resources to get started?

You can talk to an estate planning attorney which we have access to for you. Also, don't be afraid to reach out to make an appointment with us! You can book one here.



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