Spring Cleaning Tips for Your Finances

By Charlestien Harris, Retired Financial Coach at Southern Bancorp

For many people, spring means opening windows, getting rid of dust, and doing some general cleaning. While you’re freshening up your home, consider taking time to clean up your finances, too. You may be surprised by what’s hiding in your accounts, email, financial documents, and even that kitchen drawer.

Spring cleaning is a common practice this time of year. It gives you an opportunity to review your household and decide what needs to change, what can stay the same, and what should be thrown out altogether. Your finances are no different. There may be line items in your budget that need attention, such as unused subscriptions, outdated budget categories, multiple accounts, or errors on your credit report.

Below are some tips to consider as you “tidy up” your finances this spring.

1. Review and Revamp Your Budget

Take a second look at your current budget. Doing so may require making changes to a plan you’ve been faithfully following. Consider these steps:

• Audit subscriptions: Cancel unused or forgotten subscriptions and memberships.
• Update the budget: Align your budget with your current income and expenses, focusing on reducing unnecessary costs.
• Track spending: Review credit card purchases from the past few months and identify what you truly needed versus impulse or “want” purchases.

2. Reduce Debt and Increase Savings

Finding ways to reduce debt while also saving money can be challenging, but it is achievable. Two popular debt repayment strategies are the Snowball method and the Avalanche method. The Snowball method focuses on paying off the smallest debt first and then moving on to larger balances. The Avalanche method prioritizes paying off balances with the highest interest rates first, saving more money over time. Try these approaches:

• Prioritize debt repayment: Focus on paying off high-interest debt first.
• Automate savings: Set up automatic transfers to a savings or investment account.
• Create a sinking fund: Set aside money for irregular expenses, such as vacations or car repairs, to avoid draining your emergency fund.

3. Organize and Simplify Accounts

Being organized with your finances can be a tremendous advantage. Develop a plan that works for you and your family to ensure a smooth transition when changes occur. Although we don’t like to think about it, organizing your finances now can make it easier for loved ones to manage your affairs later. Consider these steps:

• Consolidate accounts: Simplify your financial life by combining multiple bank or retirement accounts where appropriate.
• Review credit reports: Obtain copies of your credit reports from Equifax, Experian, and TransUnion, and review them for errors. You can request a free report at AnnualCreditReport.com.

4. Protect and Secure Your Finances

Identity theft tends to increase this time of year, as criminals look for discarded documents and other ways to access personal information. Make sure you are using the latest protection methods to keep your finances secure. Consider these actions:

• Shred old documents: Securely destroy paper statements older than one year, but keep tax records for at least three to seven years.
• Update insurance policies: Review your auto, home, and life insurance policies for adequate coverage and potential savings.
• Review beneficiaries: Ensure beneficiaries on retirement accounts and insurance policies are current.
• Review investments and tax information: Take another look at your investment portfolio to ensure it still matches your risk tolerance, and review tax withholdings on your paycheck to avoid overpaying or underpaying.

Although we’re focusing on spring, it’s important to keep your finances organized year-round. This article doesn’t cover every option available for maintaining financial health, but it provides a solid place to start.

If you have questions or want more information on this or other financial topics, you can email me at [email protected] or write to me at P.O. Box 1825, Clarksdale, MS 38614.

Until next week – stay financially fit!