Spring Clean Your Finances for Financial Literacy Month

Money management is a skill — and like any other skill, it requires learning, training, and practice.

“Now more than ever, we’re seeing how crucial it is for Americans to understand personal finance so they can navigate financial crises effectively,” says Gary Herman, President of Consolidated Credit. “Financial fundamentals like budgeting, having a robust emergency savings fund, and minimizing credit card debt is essential to maintaining stability.”

In recognition of National Financial Literacy Month (or “National Financial Capability Month” as it was renamed back in 2015), here are 11 easy things you can do to get your finances in order and on track to achieving your money goals. 

1. Organize your financial records

April is Financial Literacy Month but also tax season, making it the perfect time to get your records in order. Sort through your documents to find which ones you need and clear out those that you don’t. Here’s how to clean out the financial clutter:

• KEEP tax documents, contracts, and property documents for seven years
• TOSS receipts and bank statements after three years
• SHRED anything you throw out (to protect your identity and other sensitive information)

2. Check your credit report

About 1 in 5 credit reports have a mistake on them according to the Federal Trade Commission, and these errors can mean a lower credit score, credit card application rejections, and expensive borrowing terms. Checking your credit report regularly is the best way to monitor for errors and can also be useful in spotting signs of identity theft. Consumers are entitled to one free credit report from each of the credit reporting bureaus (Equifax, Experian, and TransUnion) every 12 months and can access them at AnnualCreditReport.com. 

3. Review direct deposit destinations

Hopefully, you’ve followed our advice to 1) have a portion of your paycheck automatically deposited into a separate savings account and 2) participate in your company’s retirement options, like a 401(k) – especially if they match. If you do either of these things, it’s a good idea to review your contributions at least once a year and make sure you’re on track to achieve your financial goals. 

Consider increasing your savings or retirement deposits if you got a raise in the past year or are nearing retirement age. However, if you need to prioritize debt repayment or some other investment that requires having cash on hand, you might want to temporarily decrease these contributions.

4. Review insurance policies & beneficiaries

A lot can change in a year. Your health needs may have changed, requiring you to upgrade to a more flexible or more comprehensive medical plan. Maybe your family size is different due to marriage, the birth of a child, or divorce. In addition to adjusting your medical insurance coverage, you may want to add or modify other policies such as life insurance or disability insurance. Consider if big life events are coming up that might change your insurance needs.

5. Supercharge your savings

Speaking of savings accounts, if you’re not earning at least a 1% return on your funds, you’re missing out on free money. Opening a high-yield savings account can rectify this. Many offer three, four, or even five times higher returns just for storing your money like you’ve already been doing. Many high-yield savings accounts are completely free, however, in exchange for higher earnings there may be caveats such as…

• Requiring a minimum deposit to open an account
• Maintaining a monthly balance of a certain amount
• A limited number of monthly withdrawals allowed

However, any potential limitations can be easily overcome by using checking (or a different savings account) as the primary source of monthly bill payments and spending cash. 

6. Call your credit card companies

Credit card issuers sometimes lower interest rates or waive fees for clients in good standing who think to ask. They may also offer other perks like spending bonuses or special promotional offers. While there’s no guarantee you’ll get a yes, the worse that can happen is being told no.

7. Cancel unnecessary subscriptions

Many of us throw money away without realizing it thanks to forgotten subscriptions. Write out a list of all the recurring payments you have and you’ll likely find that not only do you not need all of them anymore, but just how much of your income was going towards these discretionary purchases. Some popular subscriptions you might want to consider canceling are…

• Entertainment: Movie theater passes, music or video streaming, video game credits, magazine/newspapers
• Food: Delivery services, wine clubs, farm co-ops, membership-based stores like Costco
• Personal Care: Makeup, clothing, salons, gyms

8. Refresh your budget

While you’re at it, take a moment to review your entire budget in addition to your recurring discretionary spending. The purpose is to see whether your current budget fits your current needs and lifestyle – something especially important after the raging inflation Americans experienced in the past few years. Here are a few questions to consider as you review your budget: 

• Has your total income changed since you last made your budget? If so, is it still balanced compared to your current spending? 
• Which fixed costs have increased, and by how much?
• Have you been consistently overspending in certain categories? 
• If your priorities have shifted, are they reflected in your budget? 
• What’s your average monthly cash flow?

9. Re-evaluate your financial goals

Financial Literacy Month is the perfect time to think about your financial goals like making a big purchase, increasing your savings, or preparing for retirement. Write down your biggest financial priorities considering both short- and long-term needs. Next, evaluate where you currently stand. In doing so, you’ll find the gap between what you want and what you need to get yourself where you want to be. 

10. Make a plan to tackle debt

Don’t let Financial Literacy Month end without having a plan to get rid of your debt. Not only is debt stressful but it can be expensive, making it difficult – if not impossible – to achieve financial stability. There are lots of ways to deal with debt, but the right method can vary depending on:

• The type of debt
• How much you owe
• How old the account is
• How far behind you are on payments

If you’re not sure where to start (or maybe just want an unbiased second opinion), the best thing you can do is talk to a certified credit counselor like the ones here at Consolidated Credit. As a nonprofit organization, our top priority is fulfilling our mission of spreading financial education and helping people get out of debt and get their finances in order. Our counselors provide a free debt and budget analysis to help find you the best option for your needs and unique financial situation.

11. Build financial literacy so you’re better equipped to maintain stability

“Financial downturns and household emergencies are inevitable,” says Gary Herman. “You need to plan and prepare your finances for the worst, so you can maintain stability in any situation that may arise. The more you know and the more you use that knowledge, the better prepared you will be when something like this happens.”

Consolidated Credit offers free financial education resources that can help you get started. Our free resources can help you plan for major life events—both those that are expected and the unexpected.

Whether you’re ahead or behind, take steps to eliminate any credit card debt that you may be carrying. According to our financial outlook survey, people with over $2,500 are less likely to have an emergency fund. Don’t let debt hold you back from building your financial safety net. Set a debt reduction plan or talk to a certified credit counselor to find solutions that can help you pay off credit card debt faster.