Three Ways to Spring Clean Your Finances
Spring is the perfect time for a fresh start—clean out those closets, stuff away the layers of coats and scarves, open up your space and expectations! But spring cleaning is not just for your home, it’s a vital way to refresh your finances too.
A financial spring-cleaning can set you up for success, helping you gain control of your money and plan for the future. Here are five key ways to update your financial outlook this season:
- Declutter Your Debt
- Avoid Procrastination: The worst thing you can do is ignore your debt. Debt can feel overwhelming, but taking proactive steps to manage it can make a big difference.Even small steps, like making extra payments or negotiating lower interest rates, can help you take control and reduce financial stress.
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- Prioritize Your Debts: Make a list of all your outstanding debts and decide on a payoff strategy. The snowball method (starting with the smallest debts first) and the avalanche method (tackling high-interest debts first) are two common approaches—choose the one that works best for you. BONUS: Don’t forget to set up autopay to avoid late fees, as you pay the minimum on whatever debts you’re not prioritizing yet.
- Prioritize Your Debts: Make a list of all your outstanding debts and decide on a payoff strategy. The snowball method (starting with the smallest debts first) and the avalanche method (tackling high-interest debts first) are two common approaches—choose the one that works best for you. BONUS: Don’t forget to set up autopay to avoid late fees, as you pay the minimum on whatever debts you’re not prioritizing yet.
- Tidy Up Your Taxes
- Be Prepared for What You Owe or Plan for Your Refund: With tax season wrapping up, now is the time to assess where you stand and prepare for the year ahead. If you owe taxes, ensure you have a plan to make payments without disrupting your other financial priorities. If you’re getting a refund, consider using it wisely—whether that means paying down debt, saving, or investing.
- Get Organized for Next Year: Avoid the last-minute scramble by setting up a centralized system to track receipts, deductions, and necessary documents throughout the year. Whether it’s a digital folder or a dedicated filing system, a little organization now will save you all that stress later.
- Consulting with a Certified Financial Planner™: this can be a great way to set yourself up for success and peace of mind for the following year. Yes, you can contribute to your IRA or Roth IRA and have it count for last year’s tax return. However, beyond this, you have to report on your income and spending as it stands. Using a professional to review your current state gives you the chance to plan and prepare so that next year you don’t pay any more than you have to.
- Scrub Up Your Subscriptions and Scores
- Make a list of all your subscriptions (streaming services, gym, apps). Cancel any you don’t use. Negotiate lower rates on internet, phone, etc. Consider where to bundle or switch providers for a better deal.
- Review your credit scores. You can get a free report at com, to check for errors. Make sure to pay on time and keep credit utilization low (use less than 30% of your available credit to keep your score strong). Then, finish by setting up alerts to monitor changes in your score.
- Polish Your Paperwork
- Organize important financial documents (tax returns, insurance policies, etc.): Shred old statements and documents you no longer need. Go paperless with bills and statements.
- Review your insurance policies: Make sure you have the right coverage (health, life, auto, home). Shop around for better rates or bundle policies for savings. Update beneficiaries if needed.
- NOTE: Seniors, do your legal documents need to be updated? (Power of attorney, medical directive, etc.)
- Buff Up Your Budget
- Review Your Budget: Check your income vs. expenses—are you sticking to your budget? Identify areas where you can cut back (subscriptions, dining out, impulse buys). Adjust your spending categories based on your current goals.
- Refresh Your Savings Strategy: Check if you have 3-6 months’ worth of expenses in an emergency fund. Increase your savings contribution if possible. Open a high-yield savings account for better returns.
- Set New Financial Goals: Are you saving for a big purchase (house, car, vacation)? Do you want to start a side hustle or increase income? Create a realistic action plan to achieve these goals.
- Start Planning Your Summer Travel Now: Warmer months often bring extra expenses, from vacations to weekend outings, so planning ahead is key. Think about where you want to go and set a budget for transportation, accommodations, and activities. Planning early can help you find the best deals and avoid last-minute overspending. Consider budgeting apps to make the most of your summer plans without breaking the bank.
Financial spring-cleaning is all about getting organized, reducing stress, and setting yourself up for success. By tidying up your taxes, decluttering your debt, and buffing up your budget, you’ll be in a stronger financial position for the rest of the year. Take the first step today and enjoy the peace of mind that comes with a well-organized financial life.
