Spring is a great time to clean out your closets and spruce up your garden. It's also an ideal time to organize and simplify your finances. Here are three ways to clean up your financial clutter.

1. Purge old paperwork
Getting rid of old credit card bills and financial statements can feel freeing. But don't shred everything in your file cabinet just yet. After one year, you can get rid of credit card statements and utility bills, unless they're needed for a business deduction. You can also generally purge bank and brokerage statements -- once you get your annual statement -- after one year, unless they show a trade for a gain or a loss for tax purposes. A good rule of thumb is to keep tax records for seven years. 

Which paperwork you should keep indefinitely? Save receipts for capital home improvements until you sell the home. After that, retain them for tax purposes. Also, hang onto receipts for large purchases (for insurance purposes) and brokerage statements proving cost basis of an investment you still own.

2. Create an emergency folder
If you're the CFO of your household, put together an emergency folder of information that'll help your loved ones figure out how to handle your finances in case anything happens to you. Include all the information someone would need to manage your finances, such as your account and policy numbers, physical locations and websites (including login IDs and passwords) where your assets are held, investment and retirement account information, and anything else that would need to be handled in your absence. Ideally, review this information with your financial next-in-command person and let that person know where the folder is kept. If someone else handles your finances, ask him or her to create an emergency folder for you.

3. Review your beneficiaries
Your beneficiary is the person who'll receive your assets in case something happens to you. Any account with a decent sum of money -- checking, savings, investment, or retirement -- should have a designated beneficiary. Make sure you name someone, because assets without a beneficiary run the risk of going through the lengthy and expensive probate process. Designating a beneficiary is usually as easy as filling out and signing a form. And reviewing these forms after a major life event -- like marriage, divorce, birth or adoption of a child, or death -- will ensure your assets will go to the person or people you intend them to.

Foolish takeaway
Take the time this spring to organize, clean, and simplify your finances. Doing so will not only reduce your financial clutter, but also provide you -- and your loved ones -- with peace of mind.

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