7 Easy Ways to Spring Clean Your Finances
7 Easy Ways to Spring Clean Your Finances
Don’t you love the feeling of a clean house? Even better, don’t you love the feeling of a deeply cleaned house? You likely have a list of things you want to accomplish in and around your home this spring. While the process of spring cleaning isn’t necessarily fun, it’s the results that are satisfying. There is just something lighter and more airy about the atmosphere of a home that has just been spring cleaned. The same effect occurs when you spring clean your finances.
Taking the time to “deep clean” your finances can give you a sense of peace and relaxation in regards to your money. And that feeling is worth the time and effort you will put in. It’s easy to let some aspects of your financial life run on autopilot, but making the decision to spring clean your finances annually brings attention to tasks that have been neglected or may be overdue.
There are several money moves you could make each spring. Each of them is relatively easy to execute. What exactly you put into your spring cleaning routine depends on your situation. Consider how long it’s been since you performed a particular task, and of course, keep in mind where you are on your financial journey.
Here are seven easy ways to spring clean your finances.
1. Review Your Credit Reports
This is a good time to look at your credit reports, especially if it’s been a while since you last checked them. You want to make sure there is nothing on your report that shouldn’t be. If you find an error, follow the steps to dispute it as specified by each credit bureau.
You are entitled to one free credit report per 12-month period from each of the three major credit bureaus (TransUnion, Experian, and Equifax) at AnnualCreditReport.com. Your credit card or bank may also offer your report from one or more of the credit bureaus.
2. Adjust Your Tax Withholding
If you’ve filed your taxes and owed money or received a large refund, now is the time to adjust your tax withholding before the year advances much more. If you owed a significant amount of money, you don’t want to be in the same position again, and if you received a sizeable refund, imagine what you could have done with that money if it was in your pocket throughout the year!
Of course, first consider whether or not the circumstances that led to your underpayment or overpayment will remain the same. If so, go online to the IRS Withholding Calculator to see how to adjust your withholding. You’ll also find a link there to a new W-4 form to complete and turn in to your employer.
Related Reading: 9 Ways to Spend Your Tax Refund (That You Won’t Regret)
3. Assess Your Insurance Needs
Take this time to determine if your insurance needs have changed. Has your marital or parental status changed recently? Are you a new homeowner? Was all your life insurance coverage tied to a job you recently left? Do you have an older car that could potentially be over-insured?
Some answers to these questions could cost you money, but that’s okay. You want to make sure you’re adequately covered in all areas, as the consequences of not being sufficiently insured can be financially catastrophic.
Related Reading: Life Insurance: You Need It
4. Review All Your Monthly Bills
If you did not take this important step at the end of last year or beginning of this year, the spring is the perfect time. Set aside a day to review all your bills. Eliminate what’s unnecessary and negotiate the rest for better rates.
5. Brush Up on Budgeting
If you do not budget, this is a good time to start. A budget is an action plan for your money and allows you to be in control of your money instead of the other way around. Make the decision to start budgeting monthly.
Do you already budget? Consider how you can inject some new life into your budgeting routine. Are there categories that could be eliminated or new ones that should be added? Or perhaps it’s time to switch from pen and paper to a spreadsheet or budgeting app. Brainstorm how you can up your budgeting game.
6. Simplify and Automate What You Can
Complement the spring cleaning you did in your home by reducing the paperwork your bills generate. Consider signing up for paperless billing, and reduce your check-writing each month to the few bills you are unable to pay online.
Simplify your method of handling your finances by designating specific times during the month that you will deal with your monthly bills. Look for any and all ways you can streamline your finances.
Of course, automation has its downsides, so be aware of them and only automate if it makes sense for you.
7. Calculate Your Net Worth
Your net worth stands for the value of what you own minus what you owe. You figure out your net worth by adding up the current value of all your assets (home, cars, cash, retirement accounts, investments, other items of value, etc.) and subtracting the total amount of your liabilities (mortgage, car loans, student loans, other debt, etc.).
You can calculate your net worth on your own, use an online calculator, or use personal finance software like Personal Capital which tracks the changing value of your assets and liabilities and shows your net worth at any given time.
Spring Clean Your Finances Like You Spring Clean Your Home
Much like you would with your home, approach spring cleaning your finances methodically. Create a “to-do” list of what you need to accomplish, select one task at a time to perform, complete it, and move on to the next.
Of course, these money moves can be made at any time of the year, but the spring months provide the perfect opportunity to take stock of what needs to be done financially. A little time has passed since the high-spending months of the holidays, you might be considering a vacation in the next few months, and you can set yourself up for financial success for the rest of the year.
Unlike cleaning your home, which usually costs money (at least a little), choosing to spring clean your finances could potentially save you money and have a lasting impact on your finances. That is definitely worth your time and effort!