7 Ways to Spring Clean Your Finances
Spring is an ideal time to clean up your finances, clear out the clutter, and get a fresh start. Maybe you have more money left over at the end of the month and could use a budget tweak. Perhaps you have too many automatically recurring expenses, or it’s time to apply the brakes to your credit card spending. Whatever the reason may be, consider the following seven suggestions to get a better handle on your finances this spring season.
1. Clean Up Your Spending
Whether you call it a budget or a spending plan, you only need to look in the rearview mirror over the past few months and write down your recurring bills and expenses. When you inventory those expenses, assign a priority number from one to three, with one being expenses that are genuinely essential and three being rather nice to have, but you could live without. Consider paring down any "3s" on your list; for example, dropping streaming or entertainment services you don't regularly use.
2. Clear the Decks and Put Your Savings on Autopilot
With some of those level 3 expenses removed, you can redirect that money toward regular savings contributions. A first priority would be an emergency fund to cover 3-6 months' expenses should a crisis occur; after that, putting money into savings or retirement contributions can pay great rewards down the line.
3. Review Your Tax Withholding
It can be jarring to realize a the tax refund you're looking forward to was actually at 12-month interest-free loan you gave to Uncle Sam. Instead, you can give it to yourself as a monthly upfront paycheck increase. Your advisor can offer guidance on adjusting your withholding for a better balance and slide that extra money into savings or another investment plan.
4. Inventory Your Material Wealth
Dedicate an hour or two to photographing and cataloging your household possessions. Concentrate on big-ticket items like your furniture and expensive electronics. Write out the approximate amount you paid and when you purchased the piece. As you bring new items into your home, save the receipts and update your inventory.
5. Check Into Your Renter or Home-Owner Insurance
Your spring cleaning should include a complete insurance check-up. Go to your insurance files, and this time really read the fine print. Is your coverage adequate to replace everything you inventoried after you followed suggestion #4 above? If you own your home, you probably know that replacement costs have risen everywhere. Make sure your insured amount will cover the replacement value of the material items you own.
6. Plug Into Technology
Let the free and secure technology of your online banking platform keep you on the straight and narrow. Want to receive a warning when your account balance gets too low or your credit card spending is over a set amount? Your bank can do that via email or text message.
7. Get Your Paper Files in Order
For the financial papers you must keep, devise an orderly filing system. If you’re after a more simplistic method, head to your office supply store and buy an expandable folder with month separator tabs. Stash the papers you usually throw away each month in the appropriate folder.
Finally, remember that bad financial habits come from neglect and passive spending decisions. Spring is the ideal time to get back in the driver’s seat and reacquire the big picture. Clear out the clutter and do away with what is not working for you.