Why Digital Clutter Is Killing your Financial Security (and How to Fix It)

Spring is the most popular time to clean out closets and dejunk the junk drawers. Did you know that it's also the ideal season to get your laptop, tablet, and phone files and programs under control, as well? While you may not see digital clutter as anything more than a nuisance, it can actually have a detrimental effect on your finances. 

Here's how to take back control of your desktop and phone files to get your storage — and sanity — back in balance.

The importance of cleaning up your digital clutter

Many people don't decide to clear their computer's desktop or delete old files until they run out of memory and can't play games or stream shows. But it's important to do it even before you run out of space. Having a proper plan for sorting, naming, and backing up data can ensure you know where every essential piece of data lives and how to find it when you need it. You can reduce the chances of accidentally deleting something important or having it where prying eyes can see. It also keeps your data safe, as regular backups are part of any good spring cleaning plan.

5 steps to organized data

If it's been over a year since you last tackled this project (or, like most people, you haven't done it at all), you need to start at step one and work your way through the process. Don't handle this project if you're tired, unfocused, or multi-tasking. Since you'll be dealing with your most prized info, you need to have your head in the game to win it!

1. Organize the files you want to keep

First, you'll want to make sure you have all the file folders set up to stash your important info. It's tempting to keep important data on your desktop, but this uses more memory and can cause your computer to work harder than it needs to. Instead, create subfolders in your computer's Documents folder and clearly name each one. Ideas for important subfolders include:

  • Taxes

  • Paystubs

  • Insurance

  • Work files

  • Travel plans

  • Budgeting

Go through your desktop and other random files one by one, assessing them for importance and placing the important ones into the proper subfolder. Make sure all your files have names that clearly communicate what they are without you having to open them.

Pro tip: The IRS states you should keep most files for a minimum of 3-7 years, but important files can be kept forever. Only delete things that won't have an effect on future tax bills or actions like getting a mortgage. If it's money-related, you'll most likely always need it.

2. Create a backup system

Most consumers are comfortable with cloud-based services since that's what we use for our phones and gaming systems. Your computer should be backing up your important data at least weekly, but the better backup services can even backup nightly if you want. This creates a hands-off approach to creating copies of your Documents and Desktop files (as well as photos and videos). Just be sure that you check your online backup service regularly to ensure the backups were truly created and pay that backup service bill on time. If you don't want to pay for backup services, consider a physical external hard drive or duplicate files to a second computer.

3. Snag expiring documents now

If you're set up for paperless billing, you may not even have copies of your latest financial statements. While they are available online at any time, the older statements will age out after a year or more, making it hard to get them with just a click. To make sure you always have copies of your files on hand, download these monthly or quarterly, and assign them to your existing file system. If you use statements for filing taxes, getting copies of the previous year's paperwork at the end of January every year is a good habit to get into.

4. Create a legacy system

We don't like to think about what happens when we're not around anymore, but your data needs a home when you pass on. Assign someone trustworthy, such as a family member or spouse, to access your files in your absence. Give them written instructions on what to do and when, or look into an online service that keeps your digital records safe, and grants access to them and them only.

5. Set a timer

It can be overwhelming to manage your digital clutter annually, as there is so much data to deal with. Instead, make a date to tackle digital clutter at least once a month, and reward yourself for keeping the promise. With the right reward in place as a motivator, you'll be more likely to form a habit if you add in some fun.

Ready to get decluttered?

Not only does dealing with digital clutter keep your data and financial future safer, but it's also a great way to practice self-care. There's actually a scientific connection between clutter and mood. Why not give yourself the best chance at living your best life?

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