A Financial Checklist for Spring Cleaning

By Sarah Carlson, CFP®, CLU®, ChFC®

A financial checklist for spring cleaning is an optimal opportunity to tidy up your finances, decluttering, and create a new beginning. Perhaps you have more money left over after taxes and could utilize a change in budget. 

Maybe you have too many unnecessary expenses in automatic, or it's time to cut back on your credit card spending. Whatever the reason may be, consider the following checklist for spring cleaning to enhance your personal finance planning for 2022.

1. Prioritize Your Spending

Whether you call it a financial plan or a spending plan, you need to thoroughly examine and reflect throughout the recent months and record your expenses. Prioritize your expenses by assigning them from 1 to 3:

• 1 being your needs
• 3 being nice to have, but can be cut off from your life

The level 3 expenses are what needs to be reduced. For instance, that $150 bill for cable tv is something to consider being cleared out.

2. Put Your Emergency Fund on Autopilot

From the previous cable tv example, the money you've saved can be redirected into your investments or an emergency fund. To avoid a financial catastrophe, aim to have at least 6 months in expenses covered in an emergency fund.

3. Tax Withholding Review

If you're anticipating a big tax refund this year, consider giving it to yourself as a monthly upfront paycheck increase. The reason is because what you've done is give the government a 12-month interest-free loan. Adjust your withholding for a better balance and reserve the extra money for savings or another investment plan.

4. Creating Inventory

Commit some time to documenting your household expenses. Focus on expensive items such as jewelry and high-end clothing. Write out the approximate amount you paid and when you purchased the piece. As you purchase new items, save the receipts and update your inventory.

5. Review Your Insurance

Your financial checklist for spring cleaning should include checking your insurance. Read the fine print in all of your insurance files. Assuming you own your home, you'll realize that the cost of repairs has risen. Ensure you're covered.

Likewise, it wouldn't hurt to check and possibly upgrade your life insurance, especially if your family and income has grown.

6. Utilize Technology

Allow the secure technology of online banking platforms to keep you accountable for your finances. Set up notifications when your account balance gets too low or your credit card spending goes over a certain amount. Banks can send you notification via text message, email, or your phone's app.

7. Organize Paper Documents

Develop a filing system for the financial documents you need to keep. Something simple like a folder with monthly separator tabs will keep things in order. Stash the papers you normally discard every month in the appropriate month of the folder. At the point when January 2023 rolls around, toss out the papers for January 2022 to account for the ongoing month.

Conclusion

Know that bad financial habits come from neglecting your spending decisions. This season is a great time to take back control of your financial life. As a Spokane financial advisor, I've seen how decluttering helps people get rid of what isn't financially working for them.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.