Tips to Spring Clean Your Finances

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by on April 8, 2014

Couple checking their finances Spring is the season for opening up windows, clearing out clutter and awakening your home to a warmer, brighter time of year. It also happens to be the time when your finances receive a thorough examination; tax preparation forces millions of people to go over their receipts and spending from the past year, quantify their gains and losses, and evaluate the performance of their investments from the past year. Since you’re already in the process of dissecting your finances, it’s not a bad idea to turn your spring cleaning vigor onto your spending and saving habits. Making adjustments during tax season can help you improve your financial situation so you’re in better financial shape when the next tax season rolls around. Here are some strategies to help you out.

Adjust Your Tax Withholding

Once you’ve completed your tax returns for the prior year, you might realize adjustments need to be made. Whether you’re taking too much out of every paycheck or not withholding enough–resulting in the unpleasant task of having to pay in when your taxes are due–spring is the right time to think about changing your withholding amounts. As U.S. News & World Report notes, the ideal you should strive for is to withhold as little as possible from your paychecks without having to pay at tax time.

Consolidate Your Banking and Investment Accounts

There’s nothing wrong with having a number of different checking and savings accounts, but many consumers find them to be frustrating and problematic. Too many accounts can also make it easy to lose track of where your money is at, or which accounts might be poised to accrue unwanted fees. BankRate recommends using the spring season to consolidate multiple accounts that may be serving a similar purpose, or slimming down your account portfolio to eliminate accounts that aren’t doing anything for you right now.

Check for Credit Inaccuracies

Federal law permits consumers to obtain one free copy of their credit report every year. Consumers should use this to look over their financial track record and make sure all of the listings are accurate. Inaccuracies or other problematic listings could be doing serious damage to your credit score, making it tougher to get attractive rates on loans or to secure credit approval in any form. If you find problems on your report, it might be wise to enlist the help of LifeLock or another company specializing in identity theft. These companies will be able to monitor your credit history and alert you immediately to any red flags that come up. And often ID theft protection companies offer free tips and the latest fraud news on their social media accounts, like Lifelock’s Twitter page.

Re-Examine Your Insurance

Most consumers know the value of insurance. But once that insurance has been acquired, they don’t give it another thought. LearnVest recommends countering this trend and taking a close look at your current insurance situation. With your taxes for the past year done, it’s a good time to think about whether you have the financial stability to increase your policy’s deductible, consolidate separate policies for your family members into one single policy, or even make changes to the amount of coverage you have. LearnVest discourages scaling down your insurance, but if you’re stable enough to improve the type of coverage you have, it will give you greater peace of mind and potentially save you money down the road.

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