As the weather gets warmer and the days get longer, many people channel their newfound energy into tidying up their homes. But dusting out the cobwebs and rearranging the pantry aren’t the only ways to declutter this season. Your finances may also be in need of a spruce-up.
“The spring is a great time for a financial reset or refresh to have a great rest of the year,” said Bola Sokunbi, founder of Clever Girl Finance.
Whether your savings aren’t as bulked up as you’d like or you’re struggling to pay off credit card debt, refreshing your budget and money goals can help you make sure your financial strategy is still working for you. To make it easier for you, we spoke with members of our Expert Review Board to assemble the financial spring cleaning checklist they recommend.
How to spring clean your finances, according to experts
Review your budget
Creating a budget is essential, but for it to really work, you need to revisit it regularly and adjust it as needed.
The more money you free up, the more you can put toward other financial goals and the easier it is to avoid debt, which can drag down your finances for years to come. If you’re having trouble creating -- or sticking to -- a budget, a budgeting app can help.
“Take a closer look at your transactions,” said Alaina Fingal, owner of The Organized Money. “Identify areas where you can cut back and save. Can you reduce dining out, cancel subscriptions or find a more affordable phone plan? Review each line item and see if adjustments need to be made.”
Get a handle on your debt
“One of the most challenging money areas to review is debt,” Fingal said. “However, you need to know how much debt you have in order to create a solid plan for paying it off. Add up all of your debt balances and organize them in order of how you want to pay them off.”
You can start off by reviewing your credit report.
“You can get free copies of your credit reports from TransUnion, Equifax and Experian at AnnualCreditrReport.com,” said Jannese Torres, money coach and founder of Yo Quiero Dinero. “Look for errors, such as an erroneous name or address, or omissions, such as a recent debt payoff.”
You can request a free report from each credit bureau each week by visiting AnnualCreditReport.com.
Once you have a clear picture of your current balances, you can develop a plan to pay off your high-interest debt like credit card debt, such as creating a budget, selecting a payment strategy that works for you and considering options like debt consolidation
Maximize your savings
Experts recommend saving at least three to six months of expenses in an emergency fund to cover you in the event of an unexpected event like illness or job loss. It’s also wise to set aside money for goals like buying a new car or tackling home improvements so you can avoid incurring debt.
There are several ways to grow your savings faster, but one of the easiest is to boost your interest earnings. Rita-Soledad Fernández Paulino, a personal finance coach and founder of Wealth Para Todos, who goes by Soledad, recommends reviewing your current savings rate and switching to a bank account that pays you more.
The national average rate for savings accounts is only 0.47%, according to the FDIC. But today’s best high-yield savings accounts pay more than 10 times that rate. If your savings are languishing in an account with a paltry interest rate, you owe it to yourself to switch. You can open most high-yield savings accounts online in a matter of minutes.
Another easy way to kick start your savings is to set up automatic transfers to your savings account.
Review your investments
Investments are another area where a “set it and forget” approach will work against you. It’s essential to revisit your investment strategy regularly to ensure you’re on track to reach your goals.
“Take a moment to check in with yourself and see if your investment goals are in alignment with where you are in your life right now,” Sokunbi said. “Life changes, and so might your financial ambitions. Make adjustments as needed to keep things in sync.”
Sokunbi recommends:
- Reviewing your portfolio’s performance against your expectations. “If something’s not jiving, it might be time to shake things up a bit,” she said.
- Diversifying your portfolio across asset types and industries to minimize risk.
- Identifying any fees you’re paying and see if there are ways to cut them.
- Re-evaluating your risk tolerance and adjusting your investment strategy so it’s aligned with your current appetite for risk.
Go digital, if you haven’t already
Tired of important financial paperwork cluttering up your desk? It might be time to digitize your documents.
This tip works double duty: It helps you clear away clutter in your home and makes managing your money easier.
“Create a system for organizing and storing financial documents such as insurance policies, estate plans and tax returns,” said Bernadette Joy, a personal finance coach and founder of Crush Your Money Goals. “Digitize important paperwork and secure it in a safe place. This ensures easy access to crucial information and simplifies financial management.”
You can do this by scanning documents with your printer or smartphone or opting in to receive electronic statements and bills instead of paper statements.
To make your digital documents easier to find, Sokunbi recommends “organizing relevant documents into secure digital folders. I organize bills paid online in different email folders so I can keep a record of my receipts.”
Sokunbi also recommends shredding physical documents you no longer need to keep your personal information secure.
Get ready for next tax season
You may have already filed your taxes, or you may be nearing the finish line. But once the April 15 deadline has passed, that doesn’t mean you should forget about taxes until next spring. By reviewing your tax situation now, you can set yourself up for success next year.
“Once you’ve filed your taxes, you have a true sense of how much you should be paying in taxes,” said Shang Saavedra, founder and CEO of Save My Cents. “Did you have a large refund? Consider taking more exemptions on your paycheck. Did you owe a lot of taxes? Then consider adjusting your paycheck to have more taxes taken out, or if you’re self-employed, remember to pay more towards your quarterlies and set aside money for taxes throughout the year.”
It’s especially important to stay aware of your tax obligations throughout the year if you earn self-employment income or have a side hustle. You’ll need to make estimated quarterly tax payments throughout the year to avoid IRS penalties and late fees.
In addition, Fingal advises, “If you are waiting for a refund, think through how you plan on saving or spending the additional cash.” A few suggestions for your tax refund? Pay down debt, pad your emergency fund or invest for your retirement.
Don’t overlook maintenance work
A good deep clean can help you reset, but preventative measures are also important. Just as you should inspect your HVAC system and clean out your gutters regularly, doing some maintenance on your finances can spare you stress -- and costs -- down the line.
For example, “Take your car in for a check-up,” Soledad recommended. “Make sure you are up to date with oil and coolant levels, air filter, tire pressure, etc. Reflect on how long you can expect to drive your current vehicle before you will need to purchase a new one and start saving for it.”
Other ways you can take action now to save money later include:
- Doing an energy audit on your home to identify ways to reduce your utility costs.
- Reviewing your insurance policies to ensure you have the coverage you need at the best price.
- Removing potential spending pitfalls. “This is also a great time to unsubscribe from any shopping emails if you are trying to save money, review subscriptions and cancel the ones you no longer use,” Sokunbi said.
- Scheduling time to meal plan each week so you can save on groceries and avoid costly takeout charges.
Investing a little time and energy can pay off big
Sprint cleaning your finances now can help you make smarter financial decisions and reach your goals faster. And you don’t have to do it all in one fell swoop. You can block out time on your calendar to tackle one thing at a time, like spending an hour or two each weekend on one of the above tips. However you do it, your future self -- and your future wallet -- will thank you.
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