Happy spring! Daylight savings time is here, and with the days getting longer, there’s no excuse to not set aside an hour or two for a finance spring clean.
What should a spring cleaning of your finances entail? Here are a few dos and don’ts to keep in mind as you roll up your sleeves and get to work on getting your financial situation in tip-top shape before summer rolls around.
DO clean out paperwork
Did you spend the winter squirreling away bills, receipts and other financial paperwork into an overflowing filing cabinet? While it’s great to hang on to important financial documents, jamming your monthly credit card statements into a drawer isn’t doing your financial wellbeing any favors!
This spring, take some time to sort through the junk drawer of financial paperwork. Review what’s trash and organize what you actually need to hang on to, such as tax forms and receipts related to assets or charitable donations. If you haven’t already, set up online, paperless financial statements to reduce clutter in the future. Finally, when you do have a stack of paperwork ready to recycle, be sure to shred any documents with personal information that could expose you to identity theft.
DON’T rush to close credit cards
In the hype of spring cleaning you might be tempted to close out credit card accounts you no longer use. Be very cautious! Credit scoring models reward long-standing accounts, so closing a line of credit can negatively affect your credit score even if your account balance is $0. However, there are times that closing an old credit card, especially one that you haven’t used in years, may not impact your score drastically. Before deciding to close an account, speak to accredited credit counselors, such as GreenPath Financial Wellness to learn about potential impacts to your credit score.
DO cancel unused subscriptions
Subscription services might sound great at the time, but when they go unused, you’ll find yourself with a very leaky budget! Comb through your monthly bank account and credit card statements and make a list of every subscription service you find. What’s the total impact to your monthly budget? How much are you spending on this service throughout the year – and is there a less expensive alternative? Asking these questions and eliminating subscriptions will get your finances feeling much fresher.
DON’T take spending cuts too far
While it’s great to use your spring financial clean as an opportunity to budget and make new savings commitments, don’t attempt to cut out every single cent of non-essential spending. Taking your financial goals too far is a recipe for failure. It’s much better to be realistic about spending and saving, so give yourself permission to purchase that caramel latte or whatever special treat will boost your spirits after a hard day of spring financial cleaning.
DO check up on insurance coverage
Particularly after a year living with a global pandemic, now is an important moment to check up on health and life insurance. Does your current coverage still offer the right care for right now, as well as adequate preparation for what the future holds? If you’ve had any recent changes in healthcare status, employment, or family, a different insurance option might be worth investigating.
DON’T stop after spring
Following your dedicated finance spring clean, aim to keep up the good financial habits all year long. From building a budget every month, to reading your credit card statements in detail, to checking progress on your financial goals more regularly – spring is only the start of a full year of financial wellbeing.
