Spring cleaning offers an opportunity to address parts of your house, like the garage or basement, that may get neglected during the rest of the year. Your finances can use an occasional deep cleaning too. Use the following tips to clear out the clutter and restore order to your financial house:
Review and reprioritize goals
Goals give purpose to your financial life and keep you focused on the big picture. At least once a year you should take time to proactively identify your most important financial goals in relation to your current and foreseeable needs. As a general guideline, building an emergency fund, paying off high-interest credit card debt, and saving for retirement should be high up on the list if they're not already. If you'll be receiving a tax refund this spring, give yourself a jump start by using the money toward one or more of your goals, and then think about adjusting your withholding so that you’re not giving Uncle Sam an interest-free loan for the upcoming year.
Organize money clutter by implementing a budget
Without an organized system, household mail can quickly pile up and leave you scrambling to find important items when you need them. It's the same with finances. Without a system to organize money coming in each month, it's easy to lose track of how much you're spending and thus, fail to make progress toward your goals. You may even be left scrambling to find needed funds during emergencies. Regular budgeting is the solution. It's the process of making a plan for how you will spend income beforehand.
If you already have a budget, take time to evaluate it and make sure it is still working for you. A budget is a dynamic thing. You may need to tweak it occasionally to better reflect your family’s needs.
To help you do this, we have a new tool available for download below: the Household Budget Template and Spending Tracker. Take advantage of this free tool to build a budget that works for your family.
Make any needed repairs to your insurance coverage
Insurance provides necessary protection to maintain your family’s financial strength if life presents an unexpected challenge, such as the death or disability of a primary household wage earner. One of the most important tasks you can undertake is evaluating all current insurance policies to ensure adequate coverage. For example, experts usually consider adequate life insurance coverage to equal roughly 10 times your annual salary. Also consider whether you need to obtain additional types of insurance, such as disability or long-term care.
Additional to-dos: purge files and update record-keeping systems
Go through your files, sorting old pay stubs and other items you may no longer need, being careful to retain all tax records and insurance policies. Be sure to properly shred these documents to protect yourself against identity theft. This may also be a great time to try out a new financial app or software. If you’ve been a pen-and-paper kind of person up till now, you just may be pleasantly surprised by the outcome. After all, spring is a time of renewal. By implementing even a few of these tips, you’ll be breathing new life into your finances.