April is here, and we are all enjoying the great thaw, longer days, abundant sunshine and that awesome release from winter hibernation. It has become the universal time for spring cleaning—out with the old and in with the new! Our heads fill with home improvement plans, redesigning the garden, planning for summer vacation, maybe even moving to a new neighborhood. But before we do anything, we need to harness this enthusiasm and spring clean the most important corner in our life—our finances. Below are 10 tips to help you spring clean your financial house.
Spring cleaning your financial goals
- Review your financial game plan. What should you change? What to keep? If you see that you did not succeed with last year’s financial goals, assess what happened, and set new, realistic goals accordingly. Include in your revised financial goals all possibilities that have a good chance of manifesting in this year, such as plans to start a family, retire, launch a business, or purchase a home.
- Don’t have financial goals? According to a Fidelity survey only around 31 percent of Americans set goals last year. Identify your priorities: paying off student loans, getting out debt, making a major purchase (home, car), saving for retirement, etc. and prepare a financial game plan for yourself.
- Review your budget. Take all your bills, income statements, and expenditures from last year, and evaluate the performance of your budget. Revise as necessary.
- Assess your investment portfolio. Are your investments performing according to expectations and meeting your financial goals? This is a good time to meet with your financial planner to review and revise your investment strategy, taking advantage of all new opportunities and smartly discarding what is not working.
- Organize and review your estate documents. Most of us avoid this one, but it is imperative to have an up-to-date Will, Health Care Directive and Power of Attorney. If you do not have these documents, consult a professional and prepare them. Spring clean your documents to conform to any changes in government regulations, family situation, or your health.
Spring cleaning your debt
- Holiday shopping bills can hang around until the next holiday. Consumer Reports says that 6 percent of consumers enter the next holiday season with debt from the previous one. Make every effort to clean out your holiday shopping debt. You will improve your financial health and have more money to save toward your financial goals.
- How is your credit rating? Many consumers have no idea of the status of their credit rating until they apply for credit and are rejected. Take advantage of your right to a free copy of your credit report, something you should do annually. Check for accuracy and report any errors right away. If your credit score is not looking so good, set credit improvement goals and stick to them.
Spring cleaning your financial records
- Organize all your bank, investment, retirement and other financial accounts and determine which ones are still active. Any that have been sitting dormant for a while should be closed. Do you have retirement accounts from your previous employer? Roll them over into your new retirement accounts.
- Clean out your financial filing system. Experts advise that we keep tax returns and all supporting documents for seven years. Anything older than that, plus all your old receipts and bills should be shredded (not thrown in the trash). If you are not sure about something, scan it onto your computer and destroy the paper copy. Try to digitize as much as possible.
- Spring clean your wallet. Many of us have a tendency to stuff our wallets with receipts, gift cards, business cards, movie stubs and more. Dump out everything and throw out what you no longer need. If you still have gift cards from the holidays, place them near to your credit cards so that you do not forget to use them. Better yet, if you believe there is no possibility you will ever use those gift cards, trade them in on GiftCards.com. You will lighten your load and make some money.