How to declutter your financial life - Diana Clement
THE FACTS
- Review and update bank accounts, credit cards and insurance policies to match your current situation.
- Check for recurring payments and subscriptions to trim unnecessary expenses.
- Ensure your financial documents are organised, and inform heirs about your will and key information.
It’s still January, and while many of us have focused on fighting the flab this month, it’s a great time of the year to give our financial lives a clean out too.
Start by reviewing your bank and investment accounts, credit cards and insurance policies. Close accounts you no longer use, and update any outdated insurance so that your coverage matches your current life situation. Fewer accounts and providers are easier to manage.
While you’re at it, take a close look at your last three months of bank statements, or a full year if you dare. Can you spot any recurring payments and subscriptions you can trim? Many people aren’t fully aware of what drains their accounts each month.
Now’s the perfect time to check phone plans and utility bills. Are you still paying for services you don’t use, or have discounts for your plans expired? Chances are you can phone the supplier and ask for new discounts.
Think long and hard about whether you have any long-forgotten financial obligations. Are you still named as a guarantor or co-signer for someone else’s debt? Do you have any outstanding court or tribunal judgments against you? It’s important to put these to bed.
In New Zealand, a guarantor or co-borrower remains legally liable for the debt until formally released by the lender or the loan is discharged. You might be on the hook decades down the track without realising. It’s crucial to know what you’re legally responsible for and take steps with the lender to be removed.
Next, dig out all your old physical paperwork and ask if you really need it. With most financial matters moving online, we have far less paper in our homes. Nonetheless, some people are particularly good at keeping every letter or statement that comes in. Keep what’s only truly necessary, and if possible, an image of the document rather than the original.
Having your financial accounts and paperwork under control doesn’t just benefit your current situation. If you have children, you’re doing them a huge favour by sorting it out. I inherited over 50 years of paperwork that someone had failed to deal with. There were thousands of old items, that should have been chucked decades earlier. Please don’t be that person.
When I happened to drop into conversation with an older friend that I’d simply ordered a secure document destruction bin from Abilities and dumped the entire lot, she was up in arms. Didn’t I realise how hard it was for older people, blah, blah, blah? There were decades and decades when the person in question was still of able body and mind, and not even working. It wasn’t up to me to make up for someone’s poor stewardship of their own mess.
Even after the bin, I was still left with old photos and family ephemera. That is being slowly digitised and uploaded to Ancestry.com so it doesn’t die with me.
Until recently I had boxes containing papers in my loft with messages along the lines of, “if you find this box, I will be dead, and you can dump this straight in the recycling bin”. It was work papers and old tax returns. I didn’t want the next generation being lumbered with a paper trail longer than my obituary.
Finally, sometimes we don’t have enough paper. If you died suddenly, how would your relatives find your will (you do have one don’t you?), details of your debts and your investments? What if you have crypto? And do your heirs know who your lawyer and accountant are, if you have them? It’s a good idea to create a document to keep with your will, or at least let your heirs know where it can be found. Don’t wait until you’re 50 or 60 or 70. You can die or be incapacitated at any age.
Catch up on the debates that dominated the week by signing up to our Opinion newsletter – a weekly round-up of our best commentary.