This post is part of The One Hour Project, in which you can spend just one hour to put your finances in a better place without a big lifestyle change, through frugality or other financial choices.
Many people (myself included, until pretty recently) have a box of “important papers” where they toss things that they know could be vital someday but they often don’t recall what is exactly in there. I used to keep mine in a small safe; my parents keep theirs in a safety deposit box.
Try spending some time to simply go through all of these important papers so that you understand what exactly is there and why it’s there. This serves a lot of purposes.
First, you may discover things that are out of date that you need to update. Things like passports often get tossed in these important papers and forgotten about until they’re desperately needed – and then it may be too late to get them updated for when you need them (or else it’s very expensive). I had a friend pull out a passport a day before an international trip only to realize that the passport was out of date – not good.
Another important document that may need updating is a will and/or revocable living trust, documents you should look into and create if you have a significant other or any descendents.
You may find an old life insurance policy that you’ve been paying on but not thinking about for years – do you really need it? Should it be updated? Does it have cash value that should be cashed in?
Second, you may discover items that could be better used elsewhere. For example, when I recently went through some old papers, I discovered a small number of savings bonds that I immediately cashed in and used to help with student loan debt repayment; I also found several vintage baseball cards that have some significant value but that I won’t be cashing in. In short, this one hour not only helped me find some things that I really needed to get done, but it also ended up with me having some additional cash that I didn’t have before.
Third, some effort in organizing these papers may make it easier to find things – and thus make this pile of “important papers” more useful. I found that taking these essential papers and organizing them was an essential first step in getting all of my financial papers organized, and doing that helped me to get a much clearer picture of my current financial state than I had before. Here’s how to get started with your own filing system if that’s of interest to you.
Going through the “important papers” box might only take an hour, but it might unearth some financial rewards and will definitely produce some additional peace of mind.