Spring Cleaning for Your Finances

In times past, spring signaled an opportunity to make a home fresh again. The inside of a house became sooty and dirty from being shut tight and heated with coal and wood all winter. Everything was pulled out of the house as the floors were scrubbed, walls washed down and linens aired.

Today, there’s less need for a physical spring cleaning. But going through this ritual brings a feeling of starting fresh. Just as an annual deep cleaning of our house is a chance to start fresh, reorganizing our finances every year can bring this same renewed feeling.

Here are some steps for a financial spring cleaning.

  1. Purge and shred
    Sort through your statements, bills and other financial records and only keep the records that are necessary. Our article, How Long Should I Keep My Financial Statements, gives advice on what documents you should keep and what you can get rid of.

    Once you have determined which documents you can get rid of, shred them. Don’t risk identity theft by throwing personal documents in the trash.

  2. Review your credit report
    You should review your credit report once a year to ensure that the information is correct and up to date. You are entitled to one free credit report per year from each of the major reporting bureaus, Equifax, Experian and Transunion. You can access yours on the website www.annualcreditreport.com

    When reviewing the credit report, look for information that may be incorrect or even worse, fraudulent. Each of the credit reporting agencies has guidelines for how to correct or dispute inaccurate listings. For more about what to do if you suspect you are a victim of identity theft, see our article, 5 Tips for Identity Protection in a Mega Breach World.

  3. Review insurance policies
    Review all your property and casualty insurance policies to ensure you have the appropriate coverage. If you’ve moved, remodeled your house, purchased a new vehicle or property, make sure your coverage is updated to reflect the changes. You may even be able to get better features or lower rates.
  4. Get rid of unnecessary accounts
    Look at your banking and investment accounts to see which accounts you can eliminate or combine. More accounts mean multiple statements to review, file and store. Close any inactive accounts and combine ones where you can. With less accounts, you can make things easier to manage. You may also improve your investment results by having a clearer investment strategy and reducing fees.
  5. Maximize retirement account contributions
    Check to see if you are contributing the annual maximum amount allowed to retirement and Health Savings accounts. The IRS increases contribution limits periodically, and once you have reached a milestone age (50 for retirement accounts, 55 for health savings accounts), you can do an additional “make-up” contribution. Maximizing your contributions can reduce your taxable income and help you reach your retirement goals.

An annual financial spring cleaning can bring the same kind of satisfaction as a home spring cleaning. It will help you become more organized, clear your mind of unnecessary clutter, and help you re-commit to your financial goals.

To learn more about how Blankinship & Foster helps clarify and organize your finances, contact us.

About Teresa Kakadelas

Teresa Kakadelas, CFP®, CDFA™ is a lead advisor and a member of the firm’s Executive Committee. Teresa heads up the firm’s Financial Planning Team, continually identifying and helping solve financial planning issues for clients. Teresa started the firm’s “Wise Women” luncheons, designed to help clients with financial education. Teresa and her family live in Carlsbad. She enjoys traveling, cooking and spending time with her family.

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