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Spring Clean Your Finances

Last updated Jan 29, 2024

Is your current financial situation “sparking joy?” 

Whether you answered “yes” or “no,” everyone’s finances could use an occasional spring cleaning. Follow these steps to get your money in order this season!

1. Freshen Up Your Financial Records

Our financial lives are a collection of documents and forms, from monthly credit card statements to yearly W2s. If your records aren’t neat and organized, it can make a big mess - and you may not even know it until you urgently need a document and can’t find it.

Don’t wait until an emergency happens to get things in order! Straighten them up now with these tips.

  • Gather your financial documents and put them somewhere safe. This includes recent bank and credit card statements, medical bills, and insurance claims. Any living wills, retirement and/or pension statements, inheritance information, and beneficiary forms belong here too, as well as identifying documents like your birth certificate, passport, and Social Security card.

    Some of these, such as passports and Social Security cards, will be physical documents while others, like bank statements, may be digital. Store physical items somewhere safe but easily accessible, such as a locked safe or a secure drawer, and stash digital documents in an encrypted folder on a password-protected computer.

  • Prepare for tax season. Collect the forms you’ll need, such as your W2(s), 1099 forms, and receipts from charitable donations, so they’ll be on hand when it’s time to do your taxes.1 Additionally, figure out how you’ll file - will you do it yourself with tax software, or hire an accountant?2 The quicker you resolve these questions and file your taxes, the sooner you can enjoy your refund if you received one!

  • Review your insurance coverage. According to experts, the easiest way to do this is to type up a short summary for each of your insurance policies. The summary should include the insurance provider, the policy number, the coverage period, the names of everyone covered under the policy, and any beneficiaries of the policy.3 Keep each summary with the policy it’s related to; that way, you can glean crucial information at a glance when/if you need to access the policy.

2. Brush Up On Your Budget

Experts define a budget as “a spending plan based on income and expenses.”4 Everyone needs a budget, regardless of how large their income is or how small their expenses are, since a budget determines how much you’ll spend, where you’ll spend it, and how much you can regularly save.

Here’s how to evaluate your current spending and develop a budget you can stick to.

  • Choose a money management tool. Awareness is crucial if you want more control over your finances. Luckily, there are several ways to monitor your money! Apps like You Need a Budget, Mint, and PocketGuard make it easy to track your income and spending, set budgeting goals, and check your progress.5 And for the more traditionally-minded, a digital spreadsheet or plain old pencil and paper can help you consistently keep an eye on your incoming and outgoing cash.

  • Trim unnecessary spending. The average American overspends by about $7,400 per year, particularly on nonessentials like subscription services, online shopping, and dining out.6 Overspending can leave you in debt, eat into your savings, harm your mental health, and set you back in your financial goals.7

    Go over your recent spending and look for nonessential expenses, such as restaurant meals, takeout coffee, or impulsive purchases. Ask yourself: did spending that money make you happy? Did what you bought make a significant difference in your life? If not, consider cutting that type of expense from your future spending.

  • Evaluate common budgeting systems and find one that works for you. There isn’t a one-size-fits-all solution to managing your money. Explore different budgeting systems and choose one that fits your life and financial situation.

    The quick-start budget is a great option if you’re new to budgeting and need guidance. It requires just two simple steps: choosing a tool for monitoring your money and then using it to record your current income, regular expenses, and discretionary spending. You can also plan ahead by noting the due dates of recurring bills so you never miss a payment. In addition to guiding how you’ll spend your money, these steps can help boost your credit score by helping you eliminate debt, avoid overspending, and pay your bills on time.

    A 50/20/30 budget allows you to balance budgeting and saving with treating yourself. Under its guidance, you’ll spend 50% of your income on necessities (e.g. housing, utilities, groceries) and 30% on things you want (e.g. entertainment, traveling, dining out.) The remaining 20% goes into a savings account and/or towards eliminating debt.8

    The “pay yourself first” method, also known as a “reverse budget,” asks you to build your spending plan around your savings goals.9 Whereas most budgets have you divvy out your spending and then save what’s left, “paying yourself first” requires you to plan for saving first, then budget what remains after you’ve set your desired savings aside.

a person using their computer to budget.

3. Clean Up Your Credit Score

Your credit score is a three-digit number that summarizes the information in your credit report. Lenders use this number to decide what they’ll lend to you and what terms they’ll offer; the higher your credit score, the more likely you are to be approved for credit, and the more favorable terms you’ll be granted.

On the standard score measuring scale of 300 to 850, a score of 658 or higher is considered “prime.” Anything below that is considered “near prime,” “subprime,” or “deep subprime,”10 and applicants with scores in these ranges are often subject to smaller approval amounts, extra fees, and higher interest rates.

Use these tips to boost your credit score and/or maintain your credit health, so you’ll get the best approval odds and borrowing terms.

  • Get a copy of your credit report. Just like how awareness of your spending habits can help you improve your budget, awareness of your current credit situation can help you build better credit. If you haven’t reviewed your credit report recently, get a copy from one of the major reporting bureaus like Experian, TransUnion, or Equifax. You’re entitled to one free copy from each bureau per year.

  • Inspect your report for errors. A recent study found that about 34% of consumers with a credit report have at least one error on said report.11 Some of these mistakes, particularly if they inaccurately say you’ve missed payments, opened new accounts, or filed for bankruptcy, can drag down your credit score and have a far-reaching financial impact. Review your report closely, and promptly file a dispute if you find any mistakes.

  • Examine your credit utilization ratio. Your credit utilization ratio measures the balances you owe on your credit cards relative to the cards’ credit limits. It’s one of the biggest factors in calculating your credit score; in fact, it accounts for about 30% of your overall credit score. Try to keep your ratio below 30%, and if it’s currently higher than that, lower it by making extra payments and not using your credit card for new purchases.

    You may be able to lower your credit utilization ratio with a debt consolidation loan, in which you take out a personal loan, use it to pay off your separate debts, and then make one monthly payment towards the loan. In addition to reducing your credit utilization ratio, this simplifies the debt repayment process, since you only have one payment to schedule and budget for. As long as you don’t add more debt to your credit cards once they’re paid off, this can bring up your credit score over time

Download our free Credit Health Insights tool for round-the-clock access to your score, recommendations, activity alerts, and more!

4. Make Personal Finance a Habit

Make these check-ins a consistent part of your routine! By regularly examining all aspects of your financial life, you can make your money more organized, stay on track with your budget, and keep your credit score in check.

To ensure you like what you see at each check-in, develop good monetary habits you can carry from day to day, week to week, and month to month. These may include:

When you combine consistent good habits with regular check-ins, you can enjoy financial health all year long.

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