NEWS & RESOURCES

Authored by: Jason Underwood, CFP, Financial Advisor 

10 Ways to Spring Cleaning Your Finances This Month

Spring isn’t just a time to freshen up our living spaces, it’s also the perfect opportunity to revitalize our finances. Just as we declutter our homes and clear out the cobwebs, it’s essential to take stock of our financial health and make necessary adjustments for the season ahead.

At Cordell, Neher & Company, PLLC, we are here to guide you through 10 steps to spring clean your finances effectively. These steps will help you lay the groundwork for a financially secure future.

1. Assess Your Current Financial Situation:

Begin by taking a comprehensive look at your current finances. You can create a simple financial statement on a notepad or using a template online. This includes gathering information about your income, expenses, assets, and debts. Getting an overview all in one place will allow you to see where you stand financially so you can make informed decisions about how to move forward.

2. Define Clear Financial Goals:

Once you have a clear picture of your current financial situation, it’s time to define your goals. Are you hoping to save for a large purchase, pay down debt, or increase your retirement savings? Setting specific, measurable goals will help you stay focused and motivated. Break your goals down into smaller steps so that progress is more tangible. For example, if you want to maximize your Roth IRA contribution for the year, reallocating $134 per week is easier than trying to come up with $7,000 all at once.

3. Create a Realistic Budget:

If you’ve never budgeted, it can feel overwhelming, but a realistic budget is the cornerstone of financial success. Take the time to track your income, expenses, and savings goals. Identify areas where you can cut back or reallocate funds to align with your financial goals. Remember to factor in both short-term and long-term expenses when creating your budget. There are great tools online for zero-based budgeting, some which provide real-time updates on your phone or watch. A zero-based budget gives every dollar a job; to pay down debt, pay for utilities, buy necessities, or save toward your goals. It may take a few months to get a real sense of your cash flow so give it time if your budget feels clunky at first.

4. Build an Emergency Fund:

Life is full of unexpected surprises, which is why it’s essential to have an emergency fund in place. Every household has different needs, but a good rule of thumb is to save three to six months’ worth of living expenses in a liquid, easily accessible account. It can be helpful to keep this in an account that isn’t directly tied to your checking account, to avoid the temptation to dip into it for non-emergencies. Having this financial cushion will provide peace of mind and protect you against unforeseen financial setbacks.

5. Review Your Insurance Coverage:

Insurance is a critical component of any financial plan. An annual review of your existing policies, including health, life, auto, and home insurance, to ensure you have adequate coverage for your needs. Consider increasing or decreasing your coverage especially if your circumstances have changed since you last reviewed your insurance.

6. Debt Management:

High-interest debt can quickly spiral out of control and hinder your financial progress. Make a plan to pay off your highest-interest debts first, such as credit card balances or personal loans. Once you’ve paid off these debts, you can reallocate the extra funds towards your other financial goals. The hardest part of getting out of debt is staying out of debt, so refer back to your budget often to stay on track.

7. Diversify Your Investments:

Diversification is key to building a resilient investment portfolio. Review your current investments and consider diversifying across different asset classes, industries, and geographic regions to reduce risk and maximize returns. If you’re unsure where to start, consider seeking advice from a financial advisor.

8. Plan for Retirement:

It’s never too early to start planning for retirement. Contribute regularly to retirement accounts such as 401(k)s, IRAs, or Roth IRAs, and take advantage of employer matching contributions if available. The earlier you start saving for retirement, the more time your investments will have to grow.

9. Review and Adjust Regularly:

Financial planning is not a one-and-done activity; it requires ongoing review and adjustment. Set aside time regularly to review your financial goals and progress, then adjust as needed based on changes in your life or financial landscape. Flexibility is key to staying on track towards your goals.

10. Seek Professional Guidance:

If you’re feeling overwhelmed or unsure about your financial situation, don’t hesitate to seek professional guidance. A financial advisor can provide personalized advice and help you navigate complex financial decisions, ultimately guiding you towards a more secure financial future.

By integrating these steps into your financial planning journey, you can take control of your financial future, set clear goals, and make informed decisions that will benefit you for years to come. Remember, spring cleaning your finances is not a one-time event but an ongoing process. Stay vigilant, review your progress regularly, and adjust your plan as needed to stay on track toward your financial goals.

At Cordell, Neher & Company, PLLC, we understand the importance of financial well-being and are here to guide you through every step of the process. To learn more, visit our website at cnccpa.com or call us at (509) 663-1661.