Spring is the traditional time to clean and organize your home—but another great springtime habit is getting your finances in order.
Once your taxes are filed, set aside some time to evaluate and organize your budget, debts, financial accounts and investments. By investing a few hours now, you can enjoy more financial success and greater peace of mind for the rest of the year. Here is our suggested checklist:
- Revisit your budget. With a quarter of the year behind you, check into whether you’re successfully following your budget. If you’re over-spending, this is the time to either rein in spending or create a more realistic budget. Remember that life changes often throw budgets off track. If you’ve changed jobs, welcomed a baby, or bought a new home, chances are you will need to make some adjustments.
- De-clutter your files. Already filed your taxes? Then shred all those statements, bills and other papers that have piled up over the past 12 months. Even tax records and supporting documents, which you should keep for seven years, can be scanned or made into a digital copy.
- Pay down holiday debt. Many of us dip into credit to buy gifts over the winter, and continuing to pay interest on that debt can create a serious drag on your finances. Once you pay off that holiday debt, you can redirect more of your cash flow into savings.
- Tidy up your credit. According to the Federal Trade Commission, one of every four consumer credit reports may contain an error. Such errors can result in higher-than-necessary interest rates. If your credit scores are low because of your credit history, take steps to improve them. One rule of thumb: The amount you owe on your credit cards should be less than 30% of your total available credit.
- Consolidate accounts. Having your money organized in a few accounts creates a clear understanding of what you have and how you are using it. So close that old bank account that you rarely if ever use. Roll over that 401(k) from your old job. Consolidate your brokerage accounts so that you are sure your investments are not redundant, and that you are not over-exposed to any one area of the market.
- Review your insurance. Nothing can derail your financial plans like having too little insurance to cover an unforeseen event. So pull out your life, homeowner’s and car insurance policies. Sit down with an objective financial advisor—not an insurance salesman—to ensure that your coverage levels are adequate.
- Check in on your 401(k). It’s important to maintain a mix of investments that strike a balance between growing your money and protecting against risks. Evaluating your asset allocation is definitely something you will want to do annually. A financial advisor can provide guidance in creating that balance.
Finally, remember that you don’t have to manage your finances by yourself. Consulting a financial advisor to make sure you are on track to meet your goals can be a wise investment. Please do not hesitate to contact us if you would like to discuss financial planning or investing.