Spring is officially here, which means it’s time to do some financial spring cleaning. (Yes, this exists.) Aside from continuing the tradition of overhauling your overflowing pantries and closets, you can go beyond cleaning living spaces by fine-tuning your finances.
Spring is the perfect time to spruce up your finances since you’re only a few months away when this year started when you set your financial goals. Now, it’s time to review and reassess those goals and see what’s working right for you and what’s not.
Here are some ways you can tidy up your finances and in turn will help boost your retirement savings.
Financial Spring Cleaning Tips That Actually Works
Financial Spring Cleaning Tip 1: Be kind to yourself
Did you know that one of the major stressors in life is money?
According to a recent survey by American Psychological Association, 62% of Americans find money as one of the leading causes of their stress. The image below shows other significant sources of stress.
Don’t let your past money mistakes haunt you and stress you out. You need to forgive yourself first for your past financial mistakes to have a fresh outlook on your finances and to meet your future goals.
Financial Spring Cleaning Tip 2: Spend your tax refund on one goal
Dividing your tax refund by paying credit card debt, putting it on your emergency fund, paying your student loan and paying your bills. This might seem to be a perfect idea, but the truth is, it dilutes the power of your tax refund.
Focusing on one goal, like paying your credit card debt as much as possible or putting it in a separate savings account is a lot better than sprinkling your tax refund amongst your expenses. You can also opt to use this money for self-development like learning a new skill or taking up a new course that will increase your chances of climbing up the corporate ladder and getting a raise.
Financial Spring Cleaning Tip 3: Negotiate your interest rate on credit cards
Surprise! Yes, you can negotiate your interest rate on your credit card, but only if you’re in good standing with your credit card. There’s no harm in trying, so call your credit card company and negotiate for a lower interest rate.
Here is a table of the average Annual Percentage Rate (APR) for different credit card types.
If you make regular on-time payments and you’ve been using the card for at least two years, you can drop a few interest rates. Making light threats like considering another alternative might go your way because credit companies will do what they can to keep you as their customer.
Financial Spring Cleaning Tip 4: Cut subscriptions you are not using
The easiest and fastest way to do find subscriptions you are not using is by scanning your banking transactions for subscription charges. Review all the recurring charges you have like newspapers, music services, credit monitoring services and gym membership and cancel those that you’re not using.
Financial Spring Cleaning Tip 5: Review your insurance policies
There are things that people don’t check that often like insurance, wills, and investments. The common practice is letting insurance products and investments run on auto-pilot.
As part of spring cleaning your finances, make sure that all these things are up to date and will still meet your needs. Review your policies like long term care insurance to make sure that it can still cover your future ltc needs. When facing long term care insurance rate hikes, consider making necessary adjustments to your policy. Here are some options to consider.
- Continue your policy and pay the new premium
- Lower the daily benefit amount
- Decrease your benefit period
- Adjust your benefit inflation rate
- Drop your policy
Also, check the performance of your investments in the stock market and see if there will be changed that need to be made and review your will to make sure that everything is still in place.
Financial Spring Cleaning Tip 6: Boost your retirement contributions
Considering maxing out your 401(k) contributions in your company or you can get a separate Roth IRA. If this is too much, you can always increase your contributions based on your capacity. There’s still a difference even if it’s just a 2% or 3% increase form your usual contribution. This is better than not doing anything to bump up your retirement savings
Financial Spring Cleaning Tip 7: Set Up Auto-Pay for your bills
One of the best ways to budget money is by paying everything automatically. In this way, you’ll know right away that what’s left in your bank is your remaining money to spend on other things.
However, you need to be careful once you’ve set up auto-pay for your bills. You need to keep in mind the dates your bank will be charged and to make sure that you have enough money in your account so you will not be charged with overdraft fees.
What other tips can you add to this list? What financial spring cleaning strategies you’ve done that worked wonders for you so far? Feel free to share your thoughts in the comments below.