Financial Spring Cleaning: Five Tips

For many, spring means opening the windows, sweeping up the dust and turning our cabinets. As you freshen up your home, consider ways to tidy up your finances as well. You might be surprised at what’s lurking in your accounts and inboxes, financial documents and tax returns.

Consider these five strategies to help clean up your finances:

Do you find it difficult to keep track of your various financial accounts? Many people have checking or savings accounts at one bank, a brokerage account at another, and an individual retirement account at another. Having a number of accounts at different institutions can make your financial institution seem disorganized.

Consider consolidating your accounts into a single relationship to better understand your financial flows and overall wealth. Or, if you prefer to keep accounts with different banks, take advantage of digital tools that let you see all your accounts in one place. Getting this full picture can provide a fresh perspective on what to prioritize as you manage your day-to-day cash needs and pursue your longer-term goals.

Do you sometimes feel like your debt is a mess? If you have several loans and credit cards, with different interest rates and payment dates, it may be time to consider debt consolidation. Paying off your various debts through a single loan with a competitive interest rate not only saves you money, but also leaves you with just one payment date each month. This, in turn, can help reduce financial stress. Your Morgan Stanley financial advisor can tell you more about possible debt consolidation strategies.

If you still receive paper statements from financial institutions, why not change your preferences to “paperless” notifications? This includes credit cards, loans, brokerage accounts, and even bills. Going paperless reduces the amount of physical clutter in your home, and it’s also kinder to the environment. When you receive statements digitally, you can more easily track your finances because your statements are all in one place.

As with existing paper records, many institutions will allow you to upload important documents to a secure digital vault. Once you have a digital copy, you can usually shred the hard copy. Records you absolutely must keep (in digital form if possible, but on paper if not) include tax documents for the past seven years and any documents related to loans that are still active.

When was the last time you took a long, hard look at your monthly finances? Just as going through your entire wardrobe can help you decide what to throw away or keep, taking inventory of your income and expenses can help you cut unnecessary spending and make smarter financial decisions.

With a clearer picture of your budget, you can more carefully track how much you’re saving for short-term goals, like buying a home, as well as long-term goals, like retiring at a certain age. . Consider using digital tools that allow you to set budget goals for each spending category and alert you when you’ve reached your monthly goal or are about to go over the amount.

Some ease the burden of annual spring cleaning by scheduling deep cleaning days throughout the year. Likewise, tax planning may require your attention at many times of the year, and not just during tax filing season. Whether it’s before or after Tax Day, it’s never too late to incorporate tax-efficient strategies into your financial plan.

Consider a combination of the following strategies:

  • Harvest at tax loss: Involves selling securities at a loss to help offset capital gains taxes owed in taxable investment accounts.
  • Allocation of tax assets: Different types of accounts are taxed differently. A tax-conscious asset allocation strategy that accounts for these differences can help boost after-tax returns.
  • Tax-advantaged investments: Many investments, such as municipal bonds, tax-advantaged mutual funds, and 529 plans, can allow you to save for a variety of goals while providing tax benefits.

With Morgan Stanley’s Total Tax 365 approach, your financial advisor has access to tax-smart techniques to help you manage your tax liability, 365 days a year. Talk to your financial advisor and qualified tax advisor about the tax strategies that might work best for you.

Regular meetings with your Morgan Stanley financial advisor can help ensure that your efforts today truly reflect the financial future you desire. Sometimes getting there requires a bit of decluttering and rearranging, with a little help going the distance. Speak with your Morgan Stanley financial advisor to discuss how you’re following your long-term financial goals.

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