Is a Financial Spring Cleaning on Your Radar? Tips to Get Started

When spring rolls around, thoughts often turn to decluttering closets and sprucing up living spaces. But what about your finances? Just like your home, your financial life can benefit from a thorough refresh. A financial spring cleaning is your chance to reduce stress, streamline your money management, and set the foundation for long-term success. By reviewing your budget, reorganizing accounts, and reevaluating goals, you can take charge of your finances and create clarity for the year ahead. 

Reassess and Update Your Budget

Your budget is one of the best financial tools you can keep handy to stay on track when it comes to the day-to-day management of your spending. By revisiting it regularly, you can make sure your finances align with your goals and your lifestyle—no matter how they may change. 

Here’s how to revamp your budget this spring:

● Categorize your expenses - Start by breaking down your spending into three categories:

• Needs - Essential expenses like your mortgage, groceries, and utilities.
• Wants - Non-essential spending on things like going to the movies or taking fitness classes.
• Savings - Portion of your income set aside for your retirement, an emergency fund, or any other large financial goals.

● Review your spending trends - Look over previous bank and credit card statements and see if there are any patterns. Are you overspending in some areas? Where can you adjust your spending?

● Set defined spending limits - Keep a healthy balance with your spending by setting limits to each category. A good rule of thumb is the 50/30/20 budget—allocate 50% to your needs, 30% to wants, and 20% to savings. 

Schedule a monthly check-in with yourself to review your spending for the month prior. Adjust and rebalance your limits as needed for any unexpected expenses or change in income. Over time, this routine will help you stay in touch with your spending habits and master your finances.

Organize and Consolidate Accounts

Decluttering your financial accounts can make a notable difference in how easily you manage your money. By cutting down and centralizing your finances, managing your finances will be much easier and feel far less chaotic.

Here’s how to do it:

● List all accounts - Start by creating a comprehensive inventory of all your financial accounts, including bank accounts, credit cards, and investment portfolios. Include details like account numbers, balances, and usage to make it easier to review everything from a high-level overview.

● Close unused accounts - Evaluate accounts that are redundant, inactive, or come with unnecessary fees. Closing these accounts can help minimize clutter and the risk of fraud.

● Review account features - Ensure that the accounts you keep align with your financial goals and offer features like no monthly fees, high-yield savings, or cashback rewards.

Periodically review your accounts to ensure they’re still serving your needs and explore better options if they’re not.

Audit Subscriptions and Recurring Expenses

Small recurring charges can sneak up on you and quietly eat away at your budget. Taking control of this aspect of your spending frees up funds for more meaningful uses. 

Here’s how to tackle auditing your subscriptions:

● Review your statements - Go through your bank and credit card statements line by line to identify subscriptions and recurring payments. Pay attention to services you may have forgotten about or no longer use.

● Cancel unused subscriptions - Once you’ve spotted unused or underutilized subscriptions, cancel them. For services you still need, consider switching to more cost-effective plans or annual billing to save money.

● Set reminders - Schedule periodic reviews every three months to stay on top of your subscriptions. This habit ensures you’re consistently aware of where your money is going and prevents unnecessary charges from piling up.

● Use apps for tracking - Use apps like RocketMoney or Mint to automatically track and manage your subscriptions. These tools can alert you to recurring payments and even assist in canceling unwanted services

Evaluate and Rebalance Investments

Your investment portfolio should reflect your current goals and risk tolerance. Spring is the perfect time to make adjustments:

● Check asset allocation - Ensure your investments are properly balanced between stocks, bonds, and other assets. Diversification can protect your portfolio from market volatility while maximizing potential returns.

● Review custodial accounts - If you’re managing Uniform Gifts to Minors Act (UGMA) accounts, review the assets within these accounts. Ensure that the investments are appropriate for the intended purpose and consider long-term growth opportunities that match the beneficiary’s future needs.

● Rebalance as needed - Adjust your portfolio based on market changes, life events, or shifting priorities. Regular rebalancing ensures your investments stay aligned with your risk tolerance and financial goals.

If you’re unsure about how to adjust your portfolio, consult a financial advisor. They can provide tailored guidance to help optimize your investment strategy.

Check Your Financial Safety Net

A strong financial foundation includes a safety net to protect you and your family. Taking the time to review and strengthen this safety net can bring peace of mind and greater financial security. Here’s what to review:

● Emergency fund - Ensure you have 3-6 months of living expenses saved. This fund should be easily accessible and reserved for unexpected emergencies such as medical bills, job loss, or urgent repairs.

● Insurance coverage - Evaluate policies for health, life, and property insurance. Make sure your coverage limits are adequate for your current lifestyle and family needs. Explore additional coverage options if necessary, such as disability or umbrella insurance.

● Beneficiaries - Double-check the beneficiaries on your life insurance policies, retirement accounts, and other savings tools. Outdated designations could lead to unintended consequences, so ensure they reflect your current intentions.

● Estate planning - Review key documents in your estate plan like wills, trusts, and powers of attorney to ensure they are up to date and align with your financial plans.

Revisit everything annually or during major life changes, such as marriage, the birth of a child, or career transitions, to keep your financial safety net strong and relevant.

Set New Financial Goals

Spring cleaning is an opportunity to take a step back, reimagine your future, and make progress towards your dreams. Use this opportunity to redefine what financial success looks like for you. Start by:

● Set SMART goals - Make them Specific, Measurable, Achievable, Relevant, and Time-bound.

● Prioritize milestones - Whether it’s paying off debt, saving for a vacation, or contributing more to retirement, outline your priorities.

● Break goals down into steps - Tackle your goals one actionable step at a time and track your progress.

Spring cleaning is more than just clearing out your closet for the season. Take it as an opportunity to create clarity and balance in every aspect of your life—including your finances. Taking the time to refresh your financial outlook can set you up for success in the months ahead. By reassessing your budget, consolidating accounts, reviewing subscriptions, and setting new goals, you can regain control, reduce stress, and work toward achieving your dreams. Commit to taking charge of your financial future this spring, and enjoy the lasting rewards of a more organized, stress-free life.