Since spring arrived, we are taking every opportunity to open our windows and let the fresh air in. Most of us start cleaning out the garage, cleaning the outdoor furniture, and packing up our old clothes to donate to charity. Why should spring cleaning end your home? This is the perfect time to get your personal finances in order, too. Consider these recommendations to “clean up” your finances.
Contribute to your 401(k). Be sure to contribute enough to your 401(k) to qualify for the maximum matching funds. Your employer is willing to give you this money for free, so don’t leave it on the table.
Open and IRA. If you own your own business or work for a company with no retirement plan, open an IRA. You can get great tax breaks by opening this type of retirement plan. If you don’t know which IRA is right for you, you can search “Types of retirement plans” on irs.gov.
Check the rates of your credit cards. The interest rates on your credit cards can have an impact on your balances and have the potential to add up over time. If your interest rate is increasing the balances on your cards, it’s time to shop around to find a lower rate. Other items that are options for rate controls are home loans, auto loans, and even your checking and savings accounts. For a real sense of gratification, pay off the balance that the high interest costs you. If you want to reduce our balance to zero before the end of the year, divide the amount due by 7 and pay that amount every month. Can’t bite that much every month? Move the balance to another card with an introductory rate and pay before the offer runs out. Make sure there are no high transfer fees.
Open a savings account. Follow these three steps when opening your savings account:
1. Set a financial goal and timeline.
2. Decide how much to save each month to help you reach your goal.
3. Set up automatic transfers to your savings plan from your checking account. This way, the transfer is done for you and you won’t lose the money.
Check your credit report. Make sure your credit reports are free of errors. Remember, you can order one free credit report each year from each of the three major credit bureaus. You can get one for free at annualcreditreport.com.
Organize or dispose of old financial documents. Order all your bank statements, invoices, receipts and other financial records and keep only those that are necessary. Keep in mind that you should keep tax returns, canceled checks, receipts, and any supporting documentation for your taxes for at least six years. Make sure you don’t throw your important documents in the trash without shredding them. You don’t want an identity thief picking them up.
Set up automatic bill payment. Spring cleaning isn’t just about tidying up. It’s all about making your financial life more efficient. Set up automatic bill pay and link it to your checking account in an effort to eliminate any chance of missing a payment and paying late fees.
Check your budget. Take a close look at your current budget and decide if you need to make any changes.
Pay off as much debt as possible. Spring is a good time to review your outstanding debts and what loans or credit cards you might be able to pay off. At the very least, develop a stricter payment plan. Clearing your outstanding debt quickly will put you in a much better financial position for the rest of the year.
Record your financial passwords and store all your records in a safe place. Make sure you don’t use the same password for all of your financial accounts. Protect yourself against identity theft by keeping your passwords and other financial documents in a secure online vault.
Be a community manager. Try to make a difference in your community. Believe it or not, giving of yourself to others will make you feel so much richer.
