Now that we’ve hopefully turned the page on winter, it’s time to switch our collective attention to spring. The winter thaw means different things to different people. It can mean spring break, getting outside and enjoying activities with family and friends, and it can also mean doing some organizing.
Just like it’s important to clean behind your bookcases, beds, and couches, you’d also be doing yourself a big favor by spring cleaning your finances. (We wrote about spring cleaning your credit, too.) Here are seven strategies to get started.
1. Get an Organizational System in Place
If you don’t already have a filing system in your home office, set one up now. You can get a scanner, digitize your documents, and store them in folders on your hard drive or a cloud-based storage service like Dropbox – which offers your first two GB of storage free. If you prefer hard copies, use a simple accordion folder and subdivide it into appropriate categories.
Hold onto monthly billing statements in case you need to research a potential error, and if you itemize your taxes, create files for all of your deductions including unreimbursed medical expenses and charitable donations. File your receipts throughout the year as they come in.
2. Create a Budget
It’s tough to clean up your finances if you’re not budgeting. Create your personal budget using Microsoft Excel or an online service. Make sure it’s complete and includes lines for fixed monthly bills, discretionary purchases, and annual expenses like car insurance. Then, look for ways to cut your spending. Eliminate services like your home telephone and premium cable TV channels to clean up your finances even further.
3. Streamline the Bill-Paying Process
Are you still writing out checks each month to get your bills paid? Sign up for online banking and do your bill-paying over the Internet instead. Bundle services like cable TV, smartphone, and Internet to pay fewer bills – and possibly get a reduced rate. Contact all of your billers to see if you can switch up your due date and move them toward the beginning or end of the month so you can pay everything conveniently in one sitting.
4. Review your financial apps
There are numerous apps out there that can help with financial planning, budgeting or reaching your goals. If you’ve got a smartphone overflowing with financial apps you don’t use, delete them! They’re only cluttering your organization. From there, decide which app features you like best and use the most. If you already have an app that meets those standards, great. Update your information and review your progress. If you don’t have an app with the features you’d like most, find one. Here are a few recommendations.
5. Revise Beneficiaries
For any of your accounts with beneficiaries, such as insurance policies or retirement and investment accounts, do a quick review of your listed beneficiaries. This is generally only necessary if you just got married or divorced, recently had children, or if your children just turned 18, but it never hurts to check. Make sure your money is set to go where you want.
6. Investigate Your Cash-Back Rewards
Clean up your finances and make some money at the same time by choosing credit cards with cash-back rewards that match your spending habits. A lot of cards will give you cash back on some of your daily spending like groceries and gas. Both the Chase Freedom card and Discover card offer 5% cash back on a rotating set of categories throughout the year like movies, gas, and home improvement purchases.
7. Review Your Retirement Portfolio
Your retirement investing should never be a “set it and forget it” scenario. Things change over time so it’s important to review your portfolio and make appropriate adjustments. Look for underperforming funds and consider replacing them, and make sure all your investments have low expense ratios – under 0.5% is considered good. As you get older, adjust your portfolio to focus more on safer bets like bonds and slowly transition out of stocks.
The fact of the matter is that either you run your credit and finances or they run you – it’s that simple. No one is going to clean things up for you, so take advantage of the spring cleaning season and get going now. Once you see more money leftover in your checking account at the end of each month, you’re going to be glad you made the effort.
What ways can you think of to spring clean your finances?
Russell Silva is a writer who discusses financial topics including personal finance, careers and jobs, retirement, and credit.