Spring Cleaning your Personal Finances

Photo by Nathan Cowley

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Spring is here, and there is a good chance you’re doing a little spring cleaning around the home. Whether you’re cleaning baseboards and windows around the house, or getting the garden ready for new growth outdoors, with spring comes the urge to prepare your home for a new year.

But your personal finances can use a quick little spring cleaning too! That once a year maintenance can take just a few moments, and can keep personal finance problems from piling up like mold in the grout of your shower tile, making it seem impossible to clean up. Here are a few brief things you can do to make quick work of your personal finance spring cleaning.

1. Check your account beneficiaries – In particular your retirement accounts and your life insurance should have named beneficiaries to ensure they stay out of probate. As life changes these beneficiaries can become out of date, and a quick review is in order. While checking beneficiaries is no substitute for complete estate planning, marriage, divorce, having children, changing jobs and setting up a new 401k are examples of just some of the reasons your beneficiaries might need an update.
2. Review your monthly subscriptions – Did you signup for a streaming service just to watch one football game? Finished bingeing that show and now you’re not using your subscription? Still getting that industry newspaper that you just don’t have time to read anyway? Take stock of your monthly subscriptions and see which ones might be out of date and not in use. Cancelling a couple of unused subscriptions here and there might just put a couple extra dollars in your pocket each month.
3. Pull your free credit report (or three)– If you’ve had a credit or debit card for any length of time you’ve probably had the experience of unauthorized use on that card after your personal information was compromised. But how can you be sure there aren’t other accounts out there created in your name? Or double checking that an old medical bill or loan statement isn’t getting set to an old address, and on it’s way to collections? Annualcreditreport.com is the only place where you can pull a free, no strings attached copy of your credit report once per year. You can pull one from each of the three credit bureaus (Experian, Equifax, and Transunion) so you have the option of pulling all three at once, or pulling one from a different bureau every 4 months to keep a regular review of things.
4. Review your Tax Withholding (or your quarterly estimated payments) – If it’s Spring then you’re probably getting things together for your taxes if they aren’t done already. Big unwanted tax bill? Large, unexpected refund? The solution to both of these issues might be adjusting your tax withholding from your paycheck. The IRS offers a free Tax Withholding Estimator that you can use simply by entering in information from your latest paystub (or you and your spouse if you’re married filing jointly). From there you can adjust your withholding to have more withheld now to avoid a big tax bill (and penalties), or have less withheld to avoid a refund and put more money in your pocket every pay period. Self-employed? Make sure you’re keeping up with your quarterly estimated tax payments, and check with your tax professional to make sure you’re pre-paying enough each quarter.
5. Check your insurance premiums – Home and auto insurance premiums have been on the rise. Big time. In 2023 they were one of the largest contributors to inflation. That means getting a deal on insurance premiums isn’t as easy as it used to be, but that doesn’t mean you shouldn’t check with your agent every couple of years to be sure. Making sure you’re getting all the discounts your entitled to, and seeing if a new insurer is a better fit for you as your situation changes is something an insurance agent who can shop around on your behalf can help with. While you’re at it, make sure your auto insurance liability limits have kept up with your income and net worth, and consider a personal umbrella liability policy for extra protection.
6. Check your investment allocation to see if it’s still in balance – Your investment portfolio’s allocation should be aligned with the purpose of the account. Typically, that is more conservative for shorter term goals and more growth oriented for longer term goals. Big market movements, however, can sometimes move your portfolio off target. Every now and then it isa good idea to check in on the balance of funds in your account and move it back on target if it has drifted away from your investment plan. If this an area where you aren’t comfortable on your own, consider using the help of an automated investment platform or “robo-advisor,” or team up with a financial planner who can manage your investments on your behalf.

So there it is, your spring cleaning financial checklist. Time to put on some of your favorite music, roll up your sleeves, and make quick work of your annual financial tidying up. That way, routine financial maintenance becomes easy, short, and leaves plenty of time for dusting the blinds and mulching the flowerbeds!

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