9 Ways to Spring Clean Your Finances
Every spring we throw open the windows and let in the fresh air, put away our winter clothes and boots and inevitably we start cleaning the house. Now is also the perfect time to also clean up your finances.
Spring cleaning your finances is an excellent way to refresh your financial situation and get organized
How to Spring Clean your Finances
Here are 9 things you can do this spring to help you check-in on your current financial plan, eliminate items that no longer serve you and create/update your plan so that you can set yourself up for success.
1- Clear out your filing cabinet
We all have them –filing cabinets where we throw in items and forget about them. I would like you to declutter these cabinets! When I did this last weekend, I found phone bills and taxes from 2007!
According the IRS the average American should keep tax return records for 3 years, and Canadians should keep income tax records for 6 years.
Gather and organize important financial documents such as bank statements, tax returns, investment statements, insurance policies, and receipts. Shred any unnecessary documents that are no longer required. Consider transitioning to digital storage to reduce clutter and ensure easy access to important documents.
2- Check in or set your financial goals for the year:
Are you on track to meet you 2023 financial goal? If so great! Keep going. If not, no worries, this is the perfect opportunity to reassess your short-term and long-term financial goals and make adjustments to ensure that you can reach them. This may involve tweaking your spending, saving and investments, or seeking professional advice.
3- Review / Dust off your spending plan, (aka, Budget):
Your spending plan (budget) is one of the best tools you have for reaching and maintaining your financial goals.
Start by reviewing your budget and expenses. Look for areas where you can cut back or reduce unnecessary spending.
4- Evaluate your debt:
Take a close look at your outstanding debts, including credit card balances, loans, and mortgages. Determine which debts have the highest interest rates and prioritize paying them off first. Consider debt consolidation options if it can help simplify your payments and potentially lower interest rates.
5- Check your credit report:
Obtain a free copy of your credit report from one of the major credit bureaus. Review it for any errors, discrepancies, or fraudulent activities. Disputing inaccuracies can help improve your credit score and ensure you have a correct financial history.
6- Cancel ALL unused subscriptions!
The average person spends $238 a month on subscriptions, that is over $2800 a year. Now is the perfect time to eliminate the things that no longer serve you, i.e.: monthly subscriptions that you do not use. Take a few minutes to review your credit card statements and see what you can clean out.
7- Set up an emergency fund:
If you don't have one already, establish an emergency fund to cover unexpected expenses. Aim to save three to six months' worth of living expenses in a separate account that is easily accessible in case of an emergency.
8- Review your insurance coverage:
Evaluate your insurance policies, including health, auto, home, and life insurance. Ensure you have adequate coverage for your needs and compare prices to potentially save money on premiums. Consider bundling policies for potential discounts.
9- Update / plan your retirement contributions:
Last but certainly not least, whether you want to max out your IRA, 401(k), RRSP or TFSA, now is a good time to plan how invest in your retirement savings this year. Review your investment choices within these accounts and ensure they align with your retirement goals.
If you have an employer-sponsored retirement plan, connect with your HR dept and calculate the match amount so that you can benefit form the ‘free’ money.
The bottom line:
Having your finances in order is an important part of our money journey, but let’s face it, we all get busy and we tend to put our finances on the back burner.
Remember, managing your money should not be a chore, so revisit and reassess your financial situation throughout the year to stay on track and make adjustments as needed. If your finances are in order – right on! If it’s not, no worries, just try any of the 9 steps above – you’ve got this!