Spring Cleaning
And of course, in my line of work, spring cleaning also means de-cluttering one’s finances. Fortunately, for my family, this is one ritual that they are spared and that I generally tackle alone. Similar to spring cleaning one’s garages and closets, getting one’s financial house in order for a new season means carefully assessing what’s working and what’s not, what we no longer need and what we perhaps need more of.
March is the perfect time to start your financial clean-up. Not only is it nearing the end of a fiscal quarter, but there is still a slight chill in the air keeping your attentions inside. So with this in mind, here are a few categories to help you organize your tasks and get started:
Review Investment Accounts, Insurance Policies and Estate Documents – Set aside at least a couple of hours to go through each of your accounts. By this, I mean not only what’s inside the accounts, but also the account itself. Does the titles of the account still make sense? (For example, if you are married and have only one large joint account, does it make sense to open individual accounts as well? Similarly, there are different types of joint accounts so you may want to check if you titled each in the most appropriate manner for your needs.) Are your beneficiaries up to date? Does it still make sense the hold the account where it is or could you perhaps find lower fees or better service elsewhere? For insurance policies, do your deductibles need to be altered? Have your circumstances changed so you may need to increase or decrease your benefits? It is recommended that estate documents be updated at least every three years, but given the recent changes in the tax laws, is it time to schedule an appointment with your attorney to review wills, living wills, health care directives, etc.?
Rid Yourself of the Unnecessary – Remember that department store credit card that once seemed like such a great deal but you rarely use? Now’s a good time to go through these cards and cancel the ones that do not have a balance or that you no longer need. Often you get better deals, especially cash-back, reward points or lower rates, when you consolidate debt rather than having a card for every store you frequent. On that subject, take some time to review your statements for any automatic debits that are no longer applicable. I saw monthly charges for a greeting card company, babysitting service, and online magazine subscription that I signed up for a year ago but haven’t used since.
The shredder and scanner are your go-to tools this week. Once a full year has passed, you often can get rid of individual monthly statements as long as you have a yearly summary provided to you by the bank or investment institution. Tax returns need to be kept for at least seven years but older ones can be discarded. And with identify theft on the rise, make sure you don’t just toss these papers in the trash; any documents that contain confidential information, such as account numbers or billing history, should be shredded.
Re-evaluate Your Goals – With personal circumstances constantly changing, make sure you set aside time to re-assess the goals within your financial plan to see if they still are achievable or if any adjustments need to be made. In my case, although there was always a possibility that our 10-year old minivan would last at least one more year, the recent snowstorm made it clear that it may be time to trade it in for an all-wheel drive that can handle the icy winter streets (darn, and I was really hoping we could keep it). The recent tax deal that was passed also impacted our finances, as did a recent property tax assessment on our home. Factors like these were enough to make me think that it would be wise to quickly review our personal plan and budget to see if we were still on target.
Re-schedule Another Day (or Two) to Finish – As much of a stickler as I am on these matters, I also want you to see the light of day. Therefore, the last suggestion is to re-schedule future days to tackle items that you cannot possible get to at this moment. If you try to do it all at once, you might get overwhelmed and throw up your hands at the project. Better to use “turtle steps” and get to one or two items on your list and save the rest for another day during the week. I am also a firm believer in bartering. Check and see if there are items on your spring clean-up to-do list that would make more sense to delegate to an advisor, such as a wealth manager, tax advisor, estate attorney, etc.
So before you break out your flip-flops or bike ride into the sunset, spring forward your finances with a money check up that will get you through the next season successfully and happily.