All you Need to Know About 'Spring Cleaning' Finances and the Best Ways to do it
All about 'spring cleaning' your cash
Just like our homes, backyards, and cars, even finances need to be cleaned up and organized from time to time in order to maintain stability. As seasonal changes coincide with the end of the financial year, a spring cleaning routine has also gained traction when it comes to money management. From revisiting annual financial rituals to addressing long-overdue tasks, here are the top financial moves to consider making this spring season.
1. Reconsider Your Resolutions
While many individuals made New Year's resolutions for 2024 related to spending, saving, borrowing, and earning, most failed to stick to their commitments. "For a lot of people, a top money goal was paying off credit card debt or starting an emergency fund," said Kimberly Palmer, a personal finance expert at NerdWallet. "Spring is 'the perfect time' to see if you’re making any progress," she said. However, for those of us who fell off track, there's something called a reset button. "Spring offers the perfect opportunity to restart where we left off, without dwelling on regrets," advised Ashley Folkes, a certified financial planner in Birmingham, Alabama.
2. Declutter Your Finances
Spring brings an opportunity to sift through neglected spaces like drawers, boxes, or forgotten corners of the dining room table. "You know the one I'm talking about, where you toss all your statements and bills, intending to sort them out later," Folkes said. Sorting through neglected papers is an effective method to alleviate financial stress, he suggested. "Discard unnecessary documents and organize and store essential ones."
3. Fund Your Retirement Account
Professionals have until April 15 to contribute to an IRA so that the funds go toward their savings for the year. For those under 50, the contribution limit for 2023 is $6,500, and for those older, it's $7,500. Moreover, it's advantageous to begin contributing to your IRA for 2024 early. The longer your money remains in your retirement account, the more time it has to accumulate interest. "Maxing out 401(k) contributions can lower your taxes and get you closer to financial independence," David Flores Wilson, a certified financial planner, said. "Our advice is to marginally increase your contributions every couple of months, up to a level that’s uncomfortable, then back off a little."
4. Assess Your Investment Portfolio
"You don’t need to monitor your portfolio on a daily basis, but spring is an ideal time to review your asset allocation and make sure it suits your needs," said Jeff Farrar, a certified financial planner. Over time, the composition of your investment portfolio, including stocks, bonds, and other assets, may shift, and your financial objectives may evolve accordingly. "Check to see if your allocation of stocks vs. bonds is where you want it to be," Maureen Demers, a financial planner advised.
5. Consider High-Return Investments
Over the past year or two, yields on savings accounts, certificates of deposit, money market accounts, and similar savings options have risen, reflecting a general uptick in interest rates. However, despite these increases, many individuals continue to maintain significant cash balances in low-yielding vehicles. If your savings aren't generating an annual interest rate of around 5% or higher, it may be prudent to transfer the balance into a high-yield account.