Financial Spring Cleaning: 5 Tips

The beginning of Spring is kind of a nice milestone for those of us living in cold-weather climates.  While the weather can be cold even in late March and early April (as I write this, I see snow still on the ground here), we start to get some random nice days in too.  It’s the beginning of the great thaw, and a signpost that warmer days are soon upon us.

This is also a time when many folks thing about opening the windows, and getting going on spring cleaning.  While this is usually the case with the actual home, we can also take part in a financial spring cleaning as well!  Much like the new year is a time of renewal and refocusing, we can look at the beginning of Spring as a time to “clean up” our finances, our at least do some dusting! 🙂

Here are 5 ways we can spring clean our finances:

Organize Tax Records

This is the time of year when we have either just filed our taxes, or will be doing so very early in the season.  At least here in the U.S., anyway.  Along those lines, it might be a good idea to take your new paperwork and documents, and add them to what you’ve already saved.  Then, make sure that you have multiple year’s tax documents organized properly in case you need to go back to reference them.

Think this is overrated? Well, I got a surprise letter a few years back about capital gains from a prior tax return.  It turned out that the brokerage that had originally sent me the form did not include the purchase price, so without it one could technically say that it was zero.  Crazy, obviously, since who buys stocks or funds with no value. But technicalities matter, so I had to go back and get a reissued form to avoid paying a gargantuan penalty. 

It all worked out, and it is an example of why need to keep tax records.  Might as well keep them organized too.  Oh, and on a separate note, this was also a good example of why we should consider having a professional do your taxes. 

Check Your Credit Report

It’s a good idea to keep an eye on your credit report.  One reason is to make sure that there aren’t any mistakes on there.  It’s not at all uncommon for people to check credit reports and find out that there are problems that shouldn’t exist.  While they may not be our fault, it is our fault for not being diligent about keeping tabs on this.  Hopefully things are fine,  and checking is a good quick step to make sure.

Rebalance Your Investments

Many folks like to practice asset allocation, and keep certain percentages of their portfolio in specific types of investments.  The thing is, the value of each of these investments in relation to each other might change each business day.  For example, let’s take a simple case of someone who keeps 50% of her portfolio in an S&P 500 index fund, and 50% in cash.  Let’s forget whether or not that’s smart for a moment, and just think about the concept. In this case, if stocks go up tremendously since the beginning of the year, this person will at some point have much more than 50% in stocks.

This is an example of a situation where rebalancing may be needed.  While spring cleaning finances, we can take some time to do that.

Revisit Your Insurance Coverage

Think about the insurance coverage you have.  It could be homeowner’s, renter’s, car, personal item, or some other type of insurance.  Take a look at the policy you have, and determine whether or not you have adequate coverage.  Sometimes we go on autopilot with our insurance without thinking about the actual terms, and just think “oh, I have insurance so I’m covered.”  But it might be a good idea to think about the terms of the coverage to make sure that it still fits our situation.

Also, it can be good to periodically shop for rates.  As an example, I’ve written before about ways to save on auto insurance.  It’s good to take the time to explore the different ways that we can save on not only auto, but the other types of insurance we might have as well.  Again, why go on autopilot and pay more if there’s a chance we could pay a fair amount less?  Savings can add up!

Check on Your Budget

Sometimes, we put together a budget but we get distracted with day-to-day life and don’t always monitor how our expenses are really looking.  Or, we just might track expenses but don’t try to fit them within a budget.  Frankly, I don’t think most people do either!

As a part of spring cleaning our finances, it can be good to take a look at our budget, line it up with how we are actually spending, and then see where the shortcomings may be.  If we’re doing well with our spending, then congratulations are in order!  If not, it’s time to make some changes.  No better time than the present to get back on track!

My Questions for You

Do you take any of these actions on a periodic basis?

Are there any actions you like to take as a part of our finances during the Spring?

Do you have any others to add?