Spring is all about regeneration and fresh starts.
A lot can happen in a year, and this particular season change is an annual reminder to clean up, clear out, and make room for growth for the next year. It’s not only a great time to clean out your closets and rid your home of all that winter clutter, but it’s also a perfect opportunity to spring clean your finances.
Whether you’ve had a significant life event this year and need to do an in-depth review of your finances or just want to take a quick look at where your financial life stands, looking at a few key areas will help you make quick changes that will improve your finances every year.
Here’s a fresh list of 7 things you can do to spring clean your finances:
1 – Refresh your budget
Feel like your spending got a little out of control over the winter months?
Now is a perfect time to do a refresh on your budget. If you track your spending, pull up that spreadsheet or app, or dig out that crumpled piece of paper, and take a look at exactly where your money is going. If you don’t track your spending, that’s okay, now is a great time to start!
In order to assess your finances, take a look at your last 3-4 months of bank and credit card statements. This will give you a general idea of where your money is going. If you use a lot of cash, it’ll be difficult to track where all of your money has gone over the last 3-4 months, but this is still a place to start.
The important thing to remember is you can’t make any useful changes to your spending habits in the future if you don’t have a good idea of where you are right now. Use what you find after tracking your expenses to make better, more intentional decisions about how you spend your money.
If you’ve never made a budget before but are interested in doing so, check out this fantastic article that will give you a step-by-step breakdown of how to get started.
2 – Review your investments
Once or twice a year, it’s important to sit down to review and rebalance your investments.
Personally, I do a full rebalance once annually, but if you feel more comfortable doing it twice a year, then go for it.
I will say this—investing is about the long game, so there’s no need to be obsessively checking and rebalancing your investments. This can actually hurt you over time because rebalancing your investments usually requires a transaction, and transactions cost money.
There’s also a psychological component called loss aversion that can cause undue stress if you’re constantly checking your investments. As human beings, we tend to focus more on the negative things that happen to us (financial loss) than we do on the positives (financial gain). This is unfortunate but totally normal.
So, the best thing you can do when it comes to investments? Set them and forget them.
Set up your automatic monthly investments and then check in once or twice a year to rebalance. For DIY investors, consider scheduling a yearly rebalance in your calendar so you don’t forget. If you invest with a financial advisor, they should be setting up annual visits, at a minimum, with you. Even so, it doesn’t hurt to put a yearly reminder in your own calendar to be sure it doesn’t get overlooked.
3 – Declutter your stuff
You don’t have to go full Marie Kondo, but Spring is the perfect time to go through all of your “stuff” and decide what should stay and what should go.
A simple rule of thumb—if you haven’t worn or used an item in the last year or two, you likely won’t miss it. Determine what you can donate and what you can sell.
Things you never use are just taking up space. If you have rarely used items of value, try listing them online and see if you can turn them into cash. The biggest thing here is—don’t wait. The longer you wait, the more your items depreciate.
No real items of value? Donate your unwanted items, and you may be eligible for a tax credit. Get a donation receipt and save it with your tax records. Even if there’s no direct financial gain, purging your home of all your unnecessary items will make you feel so much lighter, and that is fantastic mental currency.
4 – Use up your points and gift cards
The amount of gift cards and reward points that go unused equates to a billion dollars per year.
This is crazy. Don’t add to this statistic.
While you’re cleaning and decluttering your space, collect any leftover gift cards that you may have from the holiday season.
I’ve always been in the habit of saving gift cards. It feels almost frivolous to spend them immediately. But in the past few years, I’ve changed my practice. I use them as soon as possible unless I have a specific reason to save them. For instance, if I get a gift card to my favorite department store, and I know I need to buy a dress for a friend’s wedding in the summer, I will save it for that purpose.
It’s easy to think saving a gift card for a future purchase, especially if you don’t know what you want to spend it on, is always a smart idea. But it’s important to remember gift cards are really like cash. They can be lost, stolen, or forgotten about. I can’t tell you how many times I’ve made a purchase and then immediately remembered I had a gift card for that particular store.
The same goes for reward points. You’ve likely spent some kind of time/energy/loyalty collecting your reward points. But they expire—so use them. (Once quarantine is over, of course!)
5 – Reassess your service providers
Set aside some time to call your phone, internet, and cable companies.
Tell them you need to decrease your monthly rates. Ask if they have any packages available that will better suit your current needs. Are they running any promotions?
Be prepared to spend some time on the phone.
It’s kind of a game with cell phone and cable companies. If you’re patient enough to wait on the phone, talk to someone in customer service, then wait to speak to a manager, you’ll likely get some sort of price reduction by the end of the call…at least this is how it’s worked for me.
But there is a caveat—this only works if you have been a loyal client and you pay your bills on time. The bottom line is they want your business but only if you’ve been a good customer!
The same conversations can be had with your utility companies and even your bank—especially if you’re paying unnecessary fees.
When it comes to your bank, take a look at your bank statements prior to getting on the phone, and see what kind of fees you’re paying. I’m personally not willing to pay any bank fees. However, with certain accounts, you might decide it’s worth it.
Sample dialogue with your bank:
If you’ve been with your bank for a long time and you’re a good client (maintained a balance, not gone into overdraft on a regular basis, etc.), use this as leverage. You can say:
If they make you a better offer immediately, then great.
If they start to play hardball, then you can say:
Also, if you’re a student, let this be known to your bank. Most banks provide student accounts at zero cost.
Most of the time, if you’re able to maintain a certain balance in your account, they should be able to offer you a number of options.
Shopping Your Home Insurance
While it is common advice to shop auto insurance policies, you want to make sure you’re doing the same with your home insurance at least every two to three years. Home insurance rates are based on construction costs, neighborhood, home values and more, which means your needs could change with the markets. In addition, you may be able to find a better price with another insurance carrier if you’ve seen rates going up annually with your current provider.
As your spring cleaning your finances, now is a good time to get home insurance quotes as well. Personally, I like checking in with Policygenius, which shows quotes from multiple providers at once and makes it easy to see if any of the terms differ between policies. You wouldn’t want to choose a cheaper insurance, only to find out it’s cheaper because you have less coverage!
6 – Clean out any unwanted subscriptions
Are you aware of how many subscriptions you have? Or how many you and your partner or family members have acquired collectively? Do you know how much subscription services are costing you each month?
If not, start by making a list of all of the things you’re currently subscribed to and how much they cost. (One of our favorite money apps, Trim, will find all your recurring subscriptions and help you cancel any you don’t want!)
First, assess if you need, or even use, all of them.
Cancel any subscriptions that are not necessary and decide whether you need multiple subscriptions that provide very similar services (i.e. Netflix AND Crave AND Hulu). In the winter months, it’s nice to hunker down and binge watch some good TV. But come Spring and Summer, you might be spending more time outside in the sunshine and not require multiple streaming services.
Second, can you actually afford the subscriptions you do want to keep?
Make sure they all appear in your budget. This can help you decide if you’re spending too much of your income in any one category. If 4 of your subscription services are for entertainment and 1 is for better productivity, that might help you decide what to cut if you can’t afford them all.
Most subscription services have low monthly fees that can make you feel like they’re not a real expense. The danger here is that a bunch of small monthly fees can quickly add up to an amount that may or may not actually fit in your budget.
Third, can you combine any services or accounts?
Many subscription services partner with other companies to offer perks in exchange for your monthly loyalty. Try to look out for these. You could be paying for a service that actually comes free with another subscription you have.
For example, when I was refreshing my budget, I happened to open my Spotify account and found a notification that my plan now includes Hulu—another service I pay for—for free. I combined them and saved myself $8 a month.
Also, if your household has multiple accounts for the same service, it’s worth looking into whether they allow you to combine accounts or if there’s a special rate for a “family plan” that is less than paying for separate subscriptions to the same service.
Finding and researching every service you’re subscribed to can be time-consuming. Consider using a service like Trim that will find your subscriptions and cancel services or negotiate with each company on your behalf to save you money.
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7 – Reassess your money values
Have you ever got to the end of the month only to wonder, “where has all of my money gone?”
If money comes in only to go out without any intention behind how it’s being spent, it’s time to assess your money values.
Spend some time thinking about what is important to you and your family. Do you enjoy traveling, going to sporting events, or exercising? Is your money going towards these things that you want in your life? If it’s not, can you shift things around so it is?
Similarly, what things are you spending money on that you don’t consider to be valuable? Maybe you live in a huge house with an equally huge mortgage and this is what’s holding you back from being able to travel. Perhaps downsizing your home is an option that will help you better align with your money values.
The whole purpose of value-based spending is to make sure that when you part with your hard earned money, it’s on things you actually need and care about.
Use these tips to spring clean your finances so you know where you’re letting money slip through your fingers and figure out how you can do things differently. This will help you spend each dollar with intention which should only bring you closer to achieving your money goals.
We want to hear from you. Do you have any fresh new ideas that you use to spring clean your finances?