Financial Spring Cleaning

It’s time to get your financial house in order!

Spring is the perfect time to clear out the financial clutter and make sure your money, credit and financial plan are on the right course. Setting up a financial spring cleaning plan ensures that each year, you review key parts of personal finance to make sure you’re on the right track. But what should you focus on as you spring clean your finances? This webinar will teach you the ropes. We also provide a quickstart guide below, so you can take action on what you learned!

Financial spring cleaning quickstart guide

Step 1: Clean out the financial clutter

First, go through your financial records to toss anything that’s too old or that you no longer need.

  1. You usually only need to keep things like receipts, bank statements for three years.
  2. Things like tax documents should be kept for seven years.
  3. Keep old contracts and property documents for six years after the completion of the contract or property sale.

Remember to shred any financial documents that throw out, so identity thieves don’t get their hands on your account information.

Step 2: Check your credit report

Go to annualcreditreport.com to download a free copy of your credit report. You’re entitled to one free copy of your report from each credit bureau every 12 months. You should review your credit report for two reasons:

  1. To identify errors that you may need to correct through credit repair.
  2. If you spot accounts that you don’t recognize, it may be a sign of identity theft.

Step 3: Review your budget

Next you want to review your budget to make sure it’s still accurate. Note any new expenses, make sure spending targets are still on track, then see if you have any spending leaks to close. Spending leaks are expenses that drain income you don’t intend. This can be anything from daily vending machine trips at your office to overspending on groceries to get specialty items.

If you find a spending leak, make a commitment to close it by cutting off that expense or scaling it back. This will help you save money, because you’ll free up cash flow that you can divert to recurring monthly savings.

Step 4: Check your bank accounts

Speaking of saving money, another you want to do during financial spring cleaning is to check your accounts. You want to make sure that your checking and savings accounts are working for you, instead of against you. You also want to check the interest rates on your credit cards.

  1. For your checking account, review the fees that you paid last year. Then see if there are ways of minimizing fees. For instance, if you incurred overdraft fees last year, contact your bank or credit union offers overdraft protection.
  2. Then check the interest rate on your savings account. If you have a savings rate of less than 1%, call your financial institution to see if you can get a savings account with better growth. A higher interest rate on savings accounts will boost your savings to make your money work for you.
  3. Finally, call each of your credit card companies to see if you qualify for an interest rate reduction. If your credit score has improved over the past year and you’ve paid all your bills on time, you have a good case to ask for a lower interest rate. You can find your current rates on your credit card statement; then compare these to average interest rates

Step 5: Review your insurance policies

You also want to review your insurance policies to make sure they’re meeting your needs and fit your budget. Check to see how much of each deductible you used last year. Review your out-of-pocket medical costs to see if you have the right policy.

Step 6: Close old accounts you’re not using

It often happens that throughout the year, we sign up for services and apps that we don’t end up using. Some of these could be costing you money. For example, you may have multiple music steaming accounts, but you only use one. Closing the others could save you a few bucks if you have paid accounts.

But even if you have free accounts and apps that you don’t use, close them! Each account you have open increases your risk of identity theft if that company has a data breach. Closing accounts that you opened will help minimize your risk of identity theft.

Step 7: If you clear our physical clutter, sell it for cash

If you also plan on spring cleaning your home, take the opportunity to earn some cash. If you find items that you don’t need anymore, sell them online or through a resale app, such as LetGo. This can help you earn some extra cash, which you can use to boost your savings. If you don’t really need the extra cash and you have extra items, consider donating them to help another family in need.