Spring is a time of preparation. You’re shaking off the winter blues and getting ready for the long and lazy days of summer. It's the perfect time to reorganize, declutter, and deep clean your home, your things -- and even other areas of your life like your money.
Use this time to evaluate your current financial situation and make changes as necessary. You can also get better organize, refocus on your priorities, and make changes as needed to continue making progress on good money management habits.
Taking action to spring clean your finances now can ensure that you’ll have a happier, stress-free summer. Here's how you can get started.
Increase Your 401k Contributions
Now that you're fully into the swing of a new year, check to see if you can increase how much you’re putting toward retirement. If you’ve only been putting in 5%, see if you can up it to 10%. If you’re at 10%, keep going! See if this will be the first year you max out your 401k.
If these percentages feel unrealistic, it's okay to set smaller goals. Try to increase your contributions by just 1% or so -- then, in 6 months, increase them by the same percent again. Slow and steady growth is better than no growth at all.
This is also a great time to reallocate your funds and to check to see how well your investments are doing. You can also make sure that your 401k has increased along with any raises or promotions you’ve received.
(Remember, this all applies to you if you're self-employed, too!)
Prepare for Next Year’s Tax Return
While you’re paying your taxes in April, check to see if you need to change your withholding. You can use the IRS withholding calculator (as recommended by XYPN member Brian Wright) and contact your HR department to make changes. If you want to lower your tax bill and save money, you can do things like fund a traditional 401k or IRA or contribute to an HSA.
If you earn money on the side, make sure to save 20% for taxes and to keep records of all your deductions. If doing your taxes is a pain, figure out why. (Are your receipts hard to find? Keep a dedicated folder and spreadsheet where you track everything.)
Finally, make sure to notify employers of any change in your address so your W2s don’t get lost in the mail.
Renegotiate Your Salary
What better way to celebrate warmer weather than with a higher salary? Prepare a list of reasons why you deserve a raise or promotion. Document how you’ve helped your company save or make money, print out complimentary emails and research how much people in similar positions make. Present a well thought out argument to your boss, and you’ll be guaranteed to leave the room with more money than when you entered.
Spring Clean Your Finances -- and Your Garage
Having a garage sale is one of the easiest ways to both clear up your clutter and add some more cash to your wallet. Use the money to fund a summer vacation or to make some spring improvements on your home.
Have anything valuable? Sell it on eBay or Craigslist to make sure you’re getting the best deal on your stuff. Do your research, take great photos, and provide details to guarantee that you’ll get close to the asking price.
Close Old Accounts (But Not Lines of Credit)
Much like you'd clean out the cobwebs in the attic, take a look at your finances and see if you can clean out any old accounts you don’t use. AT the very least, ensure your old accounts are organized so they're easier to check in on throughout the year.
One usual exception: do not close accounts with lines of credit! Credit history -- and the age of your accounts -- matters when factoring your credit score. The longer you'd managed a line of credit, the higher you'll be scored in this area.
You can also see if you have any retirement accounts you want to rollover or old stocks that you’re keeping around that you need to sell. The simpler your finances are, the more likely you’ll be to keep track of them.
Redo Your Budget
It never hurts to take a look at your budget periodically to ensure your numbers are accurate -- and
Are you still budgeting for gas in terms of 2012 prices? Can you afford to increase payments to your mortgage? Maybe you need to buy life insurance now that you own a home.
You can schedule appointments with a financial professional to make sure you’re heading in the right direction. Spring is the time of new beginnings and there’s no better time to start a new leaf in your budget.