Spring Cleaning Your Finances
The arrival of spring often signifies a time of renewal, a
reminder to dust off the cobwebs and get rid of the dirt and grime that have
built up throughout the winter season. And while most spring cleaning projects
are likely focused on your home, you could take this time to evaluate and clean
up your personal finances as well.
Examine your budget..and stick with it
A budget is the centerpiece of any good personal financial
plan. Start by identifying your income and expenses. Next, add them up and
compare the two totals to make sure you are spending less than you earn. If you
find that your expenses outweigh your income, you'll need to make some
adjustments to your budget (e.g., reduce discretionary spending).
Keep in mind that in order for your budget to work, you'll
need to stick with it. And while straying from your budget from time to time is
to be expected, there are some ways to help make working within your budget a
- Make budgeting a part of your daily routine
- Build occasional rewards into your budget
- Evaluate your budget regularly and make changes if
- Use budgeting software/smartphone applications
Evaluate your financial goals
Spring is also a good time to evaluate your financial goals.
Take a look at the financial goals you've previously set for yourself — both
short and long term. Perhaps you wanted to increase your cash reserve or invest
more money toward your retirement. Did you accomplish any of your goals? If so,
do you have any new goals you now want to pursue? Finally, have your personal
or financial circumstances changed recently (e.g., marriage, a child, a job
promotion)? If so, would any of these events warrant a reprioritization of some
of your existing financial goals?
Review your investments
Now may be a good time to review your investment portfolio
to ensure that it is still on target to help you achieve your financial goals.
To determine whether your investments are still suitable, you might ask
yourself the following questions:
- Has my investment time horizon recently changed?
- Has my tolerance for risk changed?
- Do I have an increased need for liquidity in my
- Does any investment now represent too large (or too small)
a part of my portfolio?
All investing involves risk, including the possible loss
of principal, and there can be no assurance that any investment strategy will
Try to pay off any accumulated debt
When it comes to personal finances, reducing debt should
always be a priority. Whether you have debt from student loans, a mortgage, or
credit cards, have a plan in place to pay down your debt load as quickly as
possible. The following tips could help you manage your debt:
- Keep track of your credit card balances and be aware of
interest rates and hidden fees
- Manage your payments so that you avoid late fees
- Optimize your repayments by paying off high-interest debt
- Avoid charging more than you can pay off at the end of
each billing cycle
Take a look at your credit history
Having good credit is an important part of any sound
financial plan, and now is a good time to check your credit history. Review
your credit report and check for any inaccuracies. You'll also want to find out
whether you need to take steps to improve your credit history. To establish a
good track record with creditors, make sure that you always make your monthly
bill payments on time. In addition, you should try to avoid having too many
credit inquiries on your report (these are made every time you apply for new
credit). You're entitled to a free copy of your credit report once a year from
each of the three major credit reporting agencies. Visit
for more information.
Assess tax planning opportunities
The return of the spring
season also means that we
are approaching the end of
tax season. Now is also a good time to assess any tax
planning opportunities for the coming year. You can use last year's tax return
as a basis, then make any anticipated adjustments to your income and deductions
for the coming year.
Be sure to check your withholding — especially if you owed
taxes when you filed your most recent tax return or you were due a large
refund. If necessary, adjust the amount of federal or state income tax withheld
from your paycheck by filing a new Form W-4 with your employer.