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The 2021 Checklist For Spring Cleaning Your Finances

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Maybe it was the continuing dread of the pandemic or the annual tedium of winter, but for most of us, the arrival of spring was a wake-up call. Up until now, it was way easier to binge on junk food, hoard up in your house, and impulse-buy stupid junk on Amazon.

Fortunately, spring is in the air! The weather is heating up and it’s time to dust off both the literal and figurative cobwebs in our lives.

While you’re free to tidy your home or lawn, don’t let other important areas of your life, like your finances, miss out on an annual deep-clean.

Clean House With These 10 Financial To-Dos

It’s time to realign your money goals and make much-needed changes to do well in 2021. Follow this spring cleaning checklist to get your finances squeaky-clean.

1. Create or update your financial goals

Remember those goals you set for yourself at New Year’s? Don’t let them fall to the wayside. Spring is the time to check your goals, make sure they’re still working, and adjust them if needed.

Look at your expenses, income, and financial habits. Are your actions making progress? Or are you slowing yourself down?

The thing is, goals only work if you do. If you aren’t making progress on your goals, it might be time to trash them, rework them, or create new ones.

If you’re having trouble, make sure your goals hit every requirement in the SMART goal-setting framework. 

Not sure what goals you want to achieve? Try setting these financial goals within the SMART framework:

  • Paying off debt.
  • Saving a $1,000 emergency fund.
  • Setting aside 15% for retirement.
  • Investing 10% of your money in an index fund.
  • Increasing your net worth by 5%.

Set both short-term and long-term goals and put them on your calendar with reminders—the more aware you are of your goals, the more likely you are to achieve them.

2. Create or review your budget

I’ve kept a budget for years, but I confess that I don’t always remember to check it.

The thing is, if you don’t have a budget or if you don’t check your budget, you have no clue about your true financial situation.

If you aren’t keeping a budget, use spring cleaning as an excuse to create one. Set a reminder on your phone to check it every week.

From there, dig into your income and spending habits. Sometimes the budget will show that you need to cut back on takeout to stay within your budget. Other times it might show you have wiggle room to pay off your credit card debt.

The point is, you can’t keep a clean financial house if you aren’t tracking your money. I don’t care how you track it, but track your spending somewhere and review it weekly to stay on track.

3. Check your credit report

Did you know you can check your credit report once a year for free? You don’t need to pay a dime to access your report if you go to AnnualCreditReport.com. The website looks a little clunky and outdated, but it’s legit.

No matter your financial situation, you need to know your credit score. It affects everything from interest rates to your ability to qualify for a home loan. Generally speaking, credit scores below 500 are considered poor while scores above 650 are considered good.

Pull your credit report right now to see how your score changed over time. Once you know your score, right now is probably the best time to clean it up.

You can get back on track by spring cleaning your finances

4. Slash unnecessary expenses

If you’re like me, you tend to accumulate subscriptions over the winter months out of boredom. I’m personally guilty of signing up for beauty subscriptions and book clubs.

Chances are, there’s something in your budget you can cut back, whether that’s video games, salon treatments, apps, gym memberships, takeout, or vices like alcohol or soda.

But you don’t need to live like a hermit. If you’re okay with spending money on this stuff, keep it!

This is about canceling anything that isn’t valuable to you. You’ll see more breathing room in your budget as a result, so if you’re struggling to free up extra cash, check your expenses first.

5. Pay off debt

If you have the room in your budget, use spring as an excuse to pay off debt. Credit card debt is particularly harmful because of its high interest rates, so funnel any extra cash toward your debts to pay them off quickly.

Always pay the credit card bill the moment you receive it. I know it’s tempting to procrastinate because nobody likes paying bills, but procrastination can lead to late fees and interest charges.

If your bank offers auto-pay, use it. I have mine set to auto-pay my entire credit card balance on the 25th of the month. If your bank doesn’t offer auto-pay, set a reminder on your phone to pay the bill before fees accrue.

You might not be able to pay the entire balance right now, and that’s okay. As long as you pay more than the minimum, you’re making progress. As you free up more money in your budget, you’ll be able to put more towards your debt every month.

6. Increase your income

This isn’t a simple step for most folks, but it was essential to my financial success. Years ago, I was able to negotiate a $15,000 salary increase when I switched to a new job.

That $15,000 went directly toward our debts and it’s the reason we were able to buy a house!

Spring is a time for new beginnings, and if you’re looking for more financial stability, sometimes an income increase is the answer. That might come in the form of:

  • Asking for a raise: Can you justify asking for a raise at your job? I’m a fan of taking this approach before you take on a time-consuming side hustle. If you took on new responsibilities or earned a certification, you might be able to justify a pay bump.
  • Taking on a side hustle: I love side hustles, but they can be a drain on your time and productivity. If you have the time and energy, consider side hustles like freelancing, babysitting, dog walking, rideshare, tutoring, or Airbnb.
  • Selling your stuff: I sold several phones for $60 a pop at ecoATM. You can sell your other belongings on Facebook Marketplace, Craigslist, or eBay to make a few bucks while decluttering your house. It’s a win-win!

7. Organize or shred old documents

Growing up, my parents piled bank statements and other slips of old mail pile up in the corner of the kitchen. Over the course of a year, this stack of mostly-useless paper got taller and taller.

Piles aren’t your friend. After all, how are you going to find information? Sifting through 100 old bank statements? I didn’t think so.

Paper documents also increase the odds that someone will steal your financial information, which is never good. If you’re still signed up for paper statements, double-check your bank settings. Most banks offer digital statements to reduce pointless mail (and save trees).

If you do need to hang onto some of these papers, get a scanner and save them to the secure cloud. If you don’t have the money for a scanner, some libraries will let you use their scanners for free.

Shred the papers once you’ve digitized them and store them somewhere safe. I use 1Password for managing all of my passwords and storing important financial documents.

8. Make a plan for retirement (yes, right now)

I’m still in my twenties, and any time I mention retirement to my peers, they say, “Why bother? That’s so far away. I’ll probably never be able to retire, anyway.”

The sad reality is that many folks can’t retire because they don’t save enough. And I know how hard it is to save for retirement. It feels like a huge sacrifice socking money away every month when you need that money right now.

No matter how little you’re putting into retirement, you need to save something. Compound interest is an amazing thing, especially if you’re young. When you have time on your side, even small contributions add up to something amazing by the time you’re 65.

Sit down and tentatively calculate how much you’ll need to retire. In my case, I save 15% of my monthly income for retirement in a SEP IRA.

If your employer offers a 401k or a match and you aren’t using it, get to it! Email HR tomorrow to add yourself to the plan.

Spring cleaning your finances means touching up on your savings goals

9. Update your withholdings

You’ve paid your taxes already, right?

Well, once you do file, you might notice that your withholdings are off. If you got a big refund from the IRS, that’s a sign you might be saving too much throughout the year. If you got a big tax bill, you probably need to withhold more money from each paycheck.

One year we owed the IRS an additional $1,500 in taxes. Yikes! Fortunately, we had savings to cover the cost, but it was still a burden on our budget.

We adjusted our withholdings to take more out of our paychecks every month. We still paid the same amount of taxes, but it was less noticeable over the course of a year.

If you need help, use a tax estimator to update your W-4 for the correct level of withholdings.

10. Revisit your automations

I’m a busy lady. I don’t have time to manually pay bills or route funds to savings. I use automation wherever possible to put my financial health on autopilot.

I love automating my finances, but our robot overlords still mess things up. The tool could break or, in the case of my utility bill, it can withdraw too much money by accident and leave you in the hole.

Are your automatic payments for bills, savings, and retirement posting correctly? Are they the correct amounts? Do they draft on the correct date? If anything isn’t up to snuff, clean it up.

The Bottom Line

Spring is a time of awakening. Feel free to dust underneath your furniture, but make sure you keep your financial house as clean as your real one.

Follow this 10-step checklist to get your finances in ship-shape for the warmer half of the year. Revisit your goals, make more room in your budget, eliminate debt, and tidy up your documents and financial accounts to ensure your finances are reaching their true potential.

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