Spring Cleaning Your Finances- Nine Easy Steps

Spring Cleaning Your Finances

As the snow thaws and spring starts to sprout, we are ready to clean out our homes – slaying dust bunnies, banishing old, worn-out clothing, and hauling broken furniture to the curb.

Follow these nine easy steps and you’ll be well on your way to streamlining your books and optimizing your ability to monitor them.

 Spring Cleaning Your Finances in 9 Easy Step

1. Confirm That Your Budget Is Still Working for You – When done right, budgets serve as helpful tools in:

  • reining in excess spending,
  • allocating your income across your expenses and savings targets;
  • providing a tool that compares what you thought you’d spend against what you actually spent.

So, why do budgets cause anxiety? The answer often comes down to not spending the time to maintain them. As the weather warms each year, take a Saturday afternoon and review your budget and your expenses.

2. Consolidate Unused/Unnecessary Accounts – It takes time to monitor bank accounts, credit card accounts, and 401(k) accounts. And it’s increasingly more difficult to remember all those passwords and answers to security questions. While you’re spring cleaning your finances, notice if you have:

  • Bank accounts that you just don’t use,
  • Credit cards that haven’t left your wallet (or your desk drawer) in years,
  • 401(k) accounts from previous employers.

Consider combining bank accounts, or, if you’re not happy with your current bank, moving to another. If you have high-fee and/or high-rate credit cards that you just aren’t using, consider closing unused accounts – but be mindful that there are tips out there on how to do this so that it won’t impact your credit score. Also, if you have multiple IRAs or 401(k) accounts, you could consider consolidating them.

4. Review Your Tax Withholdings – Optimizing your withholdings may not seem to promise the same instant gratification as, say, trashing that patterned couch in your basement from the 80s. If you received a big tax refund this year, it’s because you overpaid your taxes and made an interest-free loan to the government. Why does that matter? Early results peg this year’s average tax refund at $1.949. Divide that by 12, and the $162 you get represents the extra amount of money the average taxpayer could have brought home each month … had he or she not withheld too much money from each paycheck.

4. Check Your Credit – Each year, you can get a free credit report from the government website, www.annualcreditreport.com. With your free credit report, you can get a sense of where your credit stands, and find out if there are any errors in the information creditors see.

5. Review Your Beneficiaries – Relationships change – all the time. Each year, check the beneficiaries on your IRA, 401(k), and life insurance policies to ensure that they’re up-to-date. A little work by you now could save your loved ones a lot of work in the future.

6. Keep That Estate Plan Up-To-Date – While we’re talking about planning for the future, be sure to keep your estate plan updated too. Have there been any major life events – births, marriages, deaths, divorces – in the last five years? Have you had any major changes to your assets? If so, it may be time to meet with your attorney and update your estate plan.

7. Have a Shredding Party – While some items like old newspapers and print advertisements can be tossed into your recycling bin, others like receipts, utility bills, and bank statements should really be shredded. Gather old documents that are no longer needed and run them through your shredder. It’s a great way to reduce clutter, clear off your physical desktop, and get some use out of that shredder you bought for the home office.

8. Make a List of What You Own –  When a disaster strikes – and you need to replace all of your things – one of the first questions you’ll get from your insurer is: what did you lose? It’s a lot easier to answer this question if you have that list.

9. Shop for the Best Deals – Mortgages, cable, cellphone plans, insurance … providers fight for your business with increasingly cutthroat deals. At least once a year, do a little research and make sure that you’re still getting the best value for your money.

Spring cleaning your finances with these nine easy steps is a great start to getting your finances in order. You need to find a spring cleaning program that works for you.

At the end of the day, you alone control your finances. Implement a financial spring cleaning program, follow it each year, and you can start to take control of your finances this spring and beyond.

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