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Spring Cleaning For Your Finances? How To Declutter Your Financial Life

Author:

Sheryl Nance-Nash

March 27, 2024

Contributing writer

By Sheryl Nance-Nash

Image by Stocksy

March 27, 2024

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Invest in your well-being: In this financial wellness series, we're diving into how to better budget for your physical, mental, and emotional health. Welcome to Wellth Check.

There's something about spring that inspires a fresh start. The winter blues start to fade, the flowers begin to bloom. Positivity is in the warming air. You exhale, feel your energy and enthusiasm rising.

With this great vibe going, it's an ideal time to spring clean not only your home but your finances. Here's what to do to get your financial house in order.

Have a money date with yourself

The first step is to understand where your money is today. "Set aside a few hours, grab your favorite snack and beverage, and dedicate that time to your finances," says Erika Rasure, Ph.D., chief financial wellness advisor and financial therapist at BeyondFinance.com, a company that helps people manage their debt.

She says to do an "audit" of your accounts. How much money do you have in your checking and savings? How much do you owe? How many creditors do you have?

"Knowing information like this will help you create a plan. This doesn't have to be scary! Doing an audit isn't as intimidating as it sounds," says Rasure.

Once you know where you are, you can begin to see where you need to focus.

Declutter and get organized

Go through your financial documents and shred anything that is no longer needed. For items you need to keep for your records, consider digitizing those documents to reduce the physical clutter.

Set up financial alerts. "Most credit cards and banks offer the ability to set up alerts that can be for when a payment is due or your balance falls below a certain amount, for example. These alerts can help prevent overdraft fees, missed payments, or fraudulent activity," says Chad Gammon, a financial planner with Arnold & Mote Wealth Management.

Consolidate accounts. Having multiple bank or investment accounts can make finances complex. Consider consolidating to make it easier to manage your money and keep track of balances and transactions. "Consolidating can help with reducing fees and less confusion with your finances," says Gammon.

Review, review, review

It's important to take stock of every aspect of your financial life. Here are the major ones to go over:

Investments

Assess the performance of your investments against benchmark indices and personal investment goals, suggests Chad Willardson, founder of Pacific Capital, a wealth management firm. "Rebalance your portfolio to maintain your desired asset allocation, taking into account any changes in risk tolerance or financial objectives."

Retirement

Make sure you are contributing enough to your company sponsored retirement plan to qualify for any matching opportunities from your employer.

Subscriptions

Take a reality check. List subscriptions and recurring expenses like streaming services, magazines, apps, and gym memberships. "Evaluate how much you use and value of each. Cancel those that no longer serve your needs or provide sufficient value," says Willardson.

The amount of money you're spending on these things may surprise you. "Cutting back on them can help you on your savings or other financial goals," says Gammon.

Insurance

Look at your insurance coverages. Do you have enough health, property, auto, and life insurance? Shop around for better rates or more comprehensive coverage if you deem that necessary. "Limit the number of vendors that you use by bundling services such as insurance. You can get better deals and have fewer bills to track," says Teri Williams, president and COO of OneUnited Bank.

Credit score

See what's being said about your credit. Obtain a free credit report from the major credit bureaus. You can do so at www.annualcreditreport.com.

Are there any errors? If so, report them immediately to the credit bureaus. Does your credit score make you want to cringe? Identify areas that need improvement, and vow to get to work to address those weak spots so your score is something you can boast about.

Debts

Check your debt ratios to make sure you're not overextending yourself. Look specifically at your total debt payments (loans, mortgage, and credit cards) in relation to your gross monthly income.

"Are the debt payments more than 36% of your income? If so, you may be overextending yourself and creating future financial problems. If your debt payments are too high, you'll also have trouble getting financing for big purchases or business startup capital," says Cady North, a certified financial planner and founder of North Financial Advisors.

Keep it simple

One of the best ways to streamline your finances is to automate. You don't have to worry about blowing a due date if you have money automatically taken from your bank account to pay regular bills. This ensures you won't have to waste money on late payment fees.

However, don't limit automation to just bill paying. You'll thank yourself later for making a move to automate your saving and investing too. Take a percentage of your income and have it automatically deposited into your savings or investment account.

The takeaway

Says Willardson, "Spring cleaning your finances is a crucial exercise to ensure your financial health remains in top shape. You'll also get a boost to your mental and physical health."