3 Ways to Spring Clean Your Finances

Posted in Budgeting & Planning, Financial Protection, Seasonal & Holidays on

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Spring is here, and it’s time to clean up our finances! Of course, one crucial aspect of cleaning your finances involves getting organized. There are some great tips to get started in my webinar “Personal Financial Organization & Goal Setting,” which you can view on SaveUp.

If you’ve already got that down, here are three simple but important things you can do to give your finances a tune-up and strengthen your financial position. 

Review and Update Automatic Retirement Account Contributions

Automatic retirement account contributions are one of the most effective ways I’ve seen clients save for retirement. Even if the amounts deposited each paycheck aren’t large, the consistent nature of these deposits add up over time. Take the time (it won’t be long) to establish these deposits. Perhaps you received a raise this past year, but didn’t increase the amount deposited–make sure to increase your deposits accordingly. If your employer matches the funds in your account, be sure your contribution is at least equal to that figure. A rule of thumb for retirement savings is 10-20% of income. Be sure you don’t exceed the maximum yearly contribution allowed for the account.

Request a Credit Report

It’s a best practice to request a copy of your credit report once a year. Fortunately, you can do so for free at annualcreditreport.com. According to marketplace.org, “It’s the only authorized service for your free annual credit report.” You have to be discerning about where you get your information. Credit Karma is another helpful resource. You can download the mobile app for free, monitor your credit score and get helpful tips to improve your credit health.

It’s important to make sure your credit report is accurate because this information can be requested by a new employer, landlord or loan officer. If you see something suspicious, it might be a sign of identity theft which is another important reason to check it periodically. You can correct errors or omissions that occur for any reason. The Federal Trade Commission has detailed information on how to make a correction.

Confirm and Update your Beneficiary Designations

Certain types of financial instruments (insurance policies, retirement accounts and annuities) have what is called a designated beneficiary. This means that upon your death, the funds in that account go directly to who you assign as your beneficiary. This is the person or persons (you can name more than one) who will benefit from the account. This designation overrides your other estate planning documents. For instance, if you state in your will that you want all your assets to be left to your mother, but your ex-boyfriend is the designated beneficiary on your 401(k) then, unfortunately, the funds in your 401(k) will go to your ex-boyfriend. These designations are very hard to contest, so its important to get them right.

Another place to check is your employee benefits, such as life insurance offered for free through your employer. Make sure those funds will be dispersed according to your wishes and coordinate your beneficiary designations with the rest of your estate planning documents. This means requesting a confirmation of your current beneficiary from each institution and then requesting a change of beneficiary form if you’d like to make an update. After the change has been processed ask for a confirmation of that update in writing and keep it with your other important documents.

It might seem obvious that improving your finances includes saving for retirement, but its important to think of your financial plan in a broader way. It’s also about putting protections in place. In this case, that means confirming your credit score and checking for identity theft. It’s also about formally expressing your wishes to loved ones. Confirming your designated beneficiaries is one way to do this. Take a little time this spring to improve your finances by following the tips above and continue to SaveUp!

This post was written by SaveUp’s personal finance contributing writer, Catherine Hawley, CFP®.

Image source: Kiplinger

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Written by Catherine Hawley

Catherine is a CERTIFIED FINANCIAL PLANNER (TM) who offers accessible and objective financial advice to individuals and families. Her aim is to help clients gain clarity and confidence so they can pursue their definition of financial success. You can find more information about her independent practice at www.catherinehawley.com. She has worked at Rhodes & Fletcher, LLC as a Personal Benefits Specialist and at the firms of Bernstein Global Wealth Management and Barclayʼs Global Investors. Catherine has a bachelors degree in communication studies from the University of California, Los Angeles where she was a scholarship athlete and captain of the womenʼs tennis team.