Spring cleaning isn’t just for your home—it’s also a great opportunity to tidy up your financial records. Whether you’re an a person who’s just looking to take a more organized approach to managing your own personal finances or you’re a business person charged with tracking financial records, maintaining organized records can help you prepare for tax season, identify financial opportunities and reduce the anxiety of not knowing what’s going on, money-wise. Here are some essential tips to help you declutter, organize and optimize your financial records.

Assess What You Have

Start by gathering all your financial documents in one place. This includes tax returns, bank statements, credit card statements, loan documents, investment records and any other financial paperwork. If you’re managing business finances, add invoices, receipts, payroll records and accounting reports to the mix. Once you have everything together, sort through your records to identify what you need to keep, what can be archived, and what should be discarded. 

Be careful here, though. One of the most common things CPAs see is people tossing financial records too soon. One of the things CPAs do as part of their job is to help ensure that deductions can be backed up, i.e., there’s a paper trail. For this step, don’t purge any records or files until your CPA gives you the go-ahead.

Know What to Keep and for How Long

The IRS and financial experts recommend keeping certain documents for specific periods. Here’s a general guide:

Tax Returns and Supporting Documents: Keep for at least seven years. The IRS can audit returns for up to three years, but if substantial errors are found, they can go back six years or more.

Bank and Credit Card Statements: Keep for one to three years, depending on their relevance for tax reporting or dispute resolution.

Investment and Retirement Account Records: Hold onto annual statements permanently and keep monthly or quarterly statements for a year.

Loan and Mortgage Documents: Retain until the loan is paid off. Once settled, keep the final payoff statement.

Property and Vehicle Records: Keep as long as you own the asset, plus a few years for tax purposes.

Business Records: For business owners, tax-related documents, payroll records, and financial statements should generally be kept for at least seven years.

Digitize and Back Up Important Documents

Paper clutter can be overwhelming, and physical records are vulnerable to loss, damage, or theft. Consider digitizing key financial documents using a scanner or secure mobile apps. Store digital copies in a secure cloud-based service or an external hard drive with encryption. Regular backups ensure that even if you lose physical copies, you still have access to critical information.

Securely Dispose of Unnecessary Documents

Once you’ve determined which documents are no longer needed, dispose of them securely. Shred any paperwork containing personal or financial information to prevent identity theft. For digital records, use secure deletion methods to ensure that sensitive data cannot be recovered.

Organize Your Financial Records

A structured filing system makes it easier to access financial information when needed. Organize both physical and digital records using a consistent labeling system. For physical files, use folders or filing cabinets with categories such as taxes, banking, insurance, investments, and loans. For digital storage, create folders with clear names and use date-based subfolders for easy reference.

Review and Update Your Budget

Spring cleaning your financial records is a perfect time to review your budget and make necessary adjustments. Look at your income and expenses to see if your spending habits align with your financial goals. Identify areas where you can cut costs, reallocate funds, or increase savings. If you’re a business owner, evaluate your financial statements to ensure profitability and cost efficiency.

Check Your Credit Reports

A well-organized financial routine should include monitoring your credit. Obtain a free credit report from each of the major credit bureaus—Experian, Equifax and TransUnion—through AnnualCreditReport.com. Review the reports for any errors, fraudulent activity, or outdated information. Disputing inaccuracies can improve your credit score and protect you from identity theft. You can also get a free report if you’ve been turned down for credit within the past 30 days.

Reevaluate Your Subscriptions and Automatic Payments

Over time, it’s easy to accumulate unnecessary subscriptions, memberships, and auto-payments. Review your bank and credit card statements to identify recurring charges that may make money trickle out of your bank account into a cascading waterfall. Cancel services you no longer use or need to cut down on wasteful spending.

Audit Your Investments and Retirement Accounts

If you have investment portfolios or retirement accounts, take this time to review their performance. Ensure that your investment strategy aligns with your financial goals and risk tolerance. If necessary, rebalance your portfolio or consult with a financial advisor to make adjustments.

Update Your Estate Planning Documents

Review and update important estate planning documents, including your will, power of attorney, and beneficiary designations. Ensuring these documents reflect your current wishes can help avoid complications for your family in the future.

Review Tax Withholding and Deductions

If your financial situation has changed—such as getting married, having a child, or starting a new job—you may need to adjust your tax withholding. Use the IRS withholding calculator to determine the appropriate withholding amount and update your W-4 with your employer if necessary.

Maintain a Routine Financial Checkup

Finally, make financial organization a year-round habit. Schedule quarterly or monthly financial checkups with your CPA to review records, update documents, and track progress toward financial goals. Regular maintenance prevents the need for a massive cleanup next spring.

Spring cleaning your financial records not only improves organization but also enhances financial well-being. By decluttering paperwork, securing digital records, and reviewing key financial aspects, you set yourself up for a smoother tax season and a stronger financial future.

by Kate Supino