After a long winter, as the short, bleak days slowly give way to longer, more sunny ones, your thoughts may be turning towards backyard barbecues and kids splashing in the pool.
And if you’ve already started spring cleaning your home, you may think that’s all you need to do.
But have you considered a spring clean for the one element of your home that supports everything else?
Your finances are the backbone of “Household Inc”…if they’re not in order, late payments and stress will overshadow your summer fun.
Even if you already know what needs adjusting, the following ideas for spring cleaning your finances can help inspire you to get your money matters into shape in time for the long summer days ahead!
Top down financial spring clean
Begin with an overall view of where you would like to be. Once you’ve pinned down what you want your financial life to look like, then you can narrow down your “to-do” list to tackle the “close-up”, day to day tasks to get you to your goals.
Review
Insurance
Life, health, auto…check all of your insurance policies to remind yourself of the coverages you have. If your personal situation has changed (e.g. you’ve had a child – or one has flown the nest, you’ve married or divorced, etc.) you may want to consider a policy change to ensure adequate coverage.
If you think you’re paying too much, shop around for a better deal or contact your existing provider to see if they can give their loyal customer a better price!
Wills, living wills, trusts, etc.
Review your current will and consult your attorney if any changes need to be made as a result of any changes in your personal circumstances.
If you don’t have a will, see about setting one up. Make an appointment with an attorney or check out the numerous online websites that can help you create your own. Of course, it’s vital that you follow your state’s laws to ensure that your will is legal and enforceable.
Investments
While most investments should be of the “buy and hold” variety, an annual review of where they’re at is a good idea.
Left a 401K at an old job? Did you roll it over into another one?
Have you left retirement accounts from former employers sitting vacant? If so, move them – if possible – to a single retirement account to make it easier to review them next year!
As we get older, investment experts recommend we move towards more conservative investing strategies to reduce our exposure (risk) and conserve as much capital as possible the closer we get to retirement.
Are you paying too much in fees? If so, consult the fund manager or your investment broker to see how (or if) you can reduce what you’re paying.
Withholding status
Look at your paycheck stub. Are the Feds – and the State – keeping more money than they should? Why give them an interest free “loan” on your money…change your withholding and keep more money in your pocket that you can use throughout the year.
Adjust
Budget
A budget, spending plan, accounts payable – whatever you want to call it – is not going to work.
Unless….
You do it!
Yes, it may seem hard, but the truth is, until you know where your money is going, any financial decision you make is like hitting the Pinata while blindfolded…sometimes you’ll hit it, but more often you’ll be swinging at nothing.
While you could break out the spreadsheet and pin down every expenditure to the penny, you really don’t have to do that…especially if you’ve tried to budget before and failed.
Keep it simple…make it easy to do…and you’re more apt to do it.
And remember, when trying anything new, it’s “progress, not perfection” that gets you to your goals!
Inventory
In the event of – God forbid, a fire, flood or other disaster – you’ll be happy that you took an inventory of all of your belongings.
Take photos of all of your items, and save receipts of every new item you bring into your home.
To cut down on paperwork, use an online home organization and inventory system that you can access at any time – day or night.
So if the time does come when you need to provide an insurer proof of your claim, all you have to do is grab your phone and show them!
Check your credit score
If it’s been a while since you last checked it, order your free credit report and credit score.
The government requires that credit bureaus provide an annual credit report without cost to every consumer who requests one.
One of the best known resources for a free credit report is AnnualCreditReport.com.
While you have to pay if you want to receive your “FICO” score – which is what most companies use when determining your creditworthiness – there are other places which offer your credit score for free.
Correct any errors – which happen surprisingly often – and if there are any legitimate dings on your credit, it’s possible to have them erased, however don’t pay hundreds or thousands of dollars to a “credit repair” company to do it.
Do it yourself!
Credit repair is beyond the scope of this article, however there are some reputable sites that will show you how you can repair your own credit…it just takes time and effort…but it can be done.
Reduce debt
Hopefully, you’re already debt free, but if you’re not, the best way to “save money” and grow your nest egg is to kill your debt!
No matter what type of debt reduction plan you follow, a debt reduction payment needs to be part of your budget for it to happen.
If you’ve been stuffing those past due bills and collection notices in a drawer, it’s time to break them out and then:
- – See if you’re being charged for something that you’re not responsible for. If so, then contact the creditor and advise them of the issue – stay on top of this debt until it’s resolved.
- – Make an offer (if it’s an old one you may get it resolved for pennies on the dollar). If they agree, get the agreement in writing before you pay it.
- – Keep copies of all of your correspondence.
Paperwork
The less paperwork you have to deal with, the less things you’ll need to “de-clutter”!
Most, if not all companies are moving towards online bill payment and account management. While you should opt for paper copies of your most important paperwork, (e.g. wills, trusts, titles, etc.) monthly bills don’t really meet the definition of “important”.
Necessary, yes…important, not so much…after all, if you’ve lost a copy of a monthly bill, your creditor will be most happy to send you another one!
If you’re already paying your monthly bills by logging online, why not make it simpler and opt for online billing?
To make it even simpler, set up auto-payment with your bank to have them pay your bills for you!
Form new habits
Make your summer…and the rest of the year…much more enjoyable by forming new habits to support your financial changes.
For example, if budgeting has always been your Achilles’ heel, make it front of mind every time you pull out your wallet or log into your bank account by sticking a note on your wallet, or in your phone…wherever you’ll see it first – before you spend money you don’t need to!
Finally, remember that changes take time…have patience with yourself and with the process. Simply knowing that you’re doing something to address your financial life can have an amazing impact on how you feel…and how much you’ll enjoy yourself this summer!
