Spending the time to declutter and organize your finances this spring can help to set you up for financial success for the rest of the year. Gathering and pruning financial documents, tidying up your budget and polishing your portfolio will go a long way to cleaning up the clutter in your financial life. Here are six simple steps to take this spring to get your financial house in order.
- Deal with debt
Debt should be a key item on your spring finance cleaning list, but it can be tricky. Multiple loans from multiple lenders, all with different payments and interest rates can quickly complicate things. Paying down high interest rate debt first is a good place to start, and then make sure you are checking your credit report regularly. Consider consolidating debt into a single loan with a competitive interest rate. This can help you get a clearer picture of your overall finances, and help you save over time. Keep an eye out for any factors that could be negatively impacting your credit score as well, such as incorrect personal information, balance errors, or even signs of identity theft.
- Put an estate plan in place
Don’t underestimate the importance of having an estate plan, now is a great time to go ahead and put one in place no matter what your age. Properly funded and tax-advantaged estate plans are beneficial for everyone, you don’t have to be wealthy, put the power of compounding interest to work for you over time.
If you already have an estate plan in place, be sure to review it periodically, especially after any significant life changes. Also make sure the beneficiaries on all of your accounts are up to date, not just the ones on your will. Beneficiaries named on documents like life insurance policies and 401(k)s take precedence over those named in a will. If you don’t have one at the time of your passing, the state is responsible for distributing your property, which can leave loved ones to deal with lengthy legal disputes.
- Clean up your budget
This time of year is a great time to review your budget, inflow and outflow. Taking a closer look at how much you earn versus how much you spend (income vs expenses) can help set you up for better cash flow the rest of the year, and help you identify any unnecessary expenses or purchases you may need to cut back on.
A detailed review of your budget can also help you decide whether you have extra funds available to contribute more money to retirement accounts, or pay down any debt. Also make sure to review the financial goals you made in January against progress made these last few months. Determine if you are falling behind, there are still a few months left in the year to catch up!
- Review your insurance policies
Review all insurance policies to make sure you are getting good rates. It is also possible that you are over-insured, or under-insured. Make sure you have the proper amount of coverage based on your situation. If you own a business, consider a commercial insurance policy. The right policy can keep you in business in an emergency situation or if a disaster strikes.
- Get rid of unwanted subscriptions
It seems lately that every company and service on the planet has a subscription model that charges you monthly. When you are doing your spring financial cleaning, take a look at what subscriptions you are actually paying for, and consider canceling the subscriptions you do not use. This can end up saving you a good chunk of money each month, since even reasonable fees can add up quickly. There may even be some subscriptions you are unaware of, or thought you cancelled previously.
- Sell unwanted or old items
While doing your spring home cleaning, check to see if some items like historical memorabilia, antiques, coins, jewelry or other vintage items might actually be worth something and generate some extra cash if sold instead of “junked.” Put that cash you get from selling these unwanted items can be added to existing investment accounts, or used to make an investment account!
Reach Out to Us: Our TFG tax and accounting professionals can provide assistance if you are serious about getting your financial affairs in order. Spring is the perfect time for cleaning up your financial house, which will help you save more to meet your goals by the end of the year. Contact us at 855-542-7537, or CPA@fuoco.com.
