As temperatures warm up, trees begin budding, and the days get longer, you probably throw open your windows and think about spring cleaning your home. As you tackle washing windows, cleaning carpets, and sorting out the garage, don’t forget to consider your finances. Check out these tips to successfully spring clean your finances.
1. Reassess Your Budget
Take some time to go over your budget and make a plan for the upcoming year. Look for areas where you can cut costs or reallocate your resources to make your life feel more comfortable. For example, you may want to take the time to get new insurance quotes to see if you can save some money, or you may want to cut the cord and replace cable with a low price streaming app.
If you need help sticking to a budget, consider looking into an app that can alert you when you are about to reach your spending limit in certain categories. Alternatively, a lot of people enjoy the envelope system. With this budgeting technique, you put cash for groceries, coffee, gas, or other categories into envelopes. You spend out of the envelopes, and when they’re empty, your budget is depleted and you can refill on your next payday.
2. Update Your Tax Withholding
For many people, spring means tax return time, and for others, spring brings a tax bill. A tax bill can put unnecessary strain onto your budget, and while a refund can feel nice, it indicates that you’ve been giving Uncle Sam an interest-free loan for the duration of the year.
To ensure you’re paying the right amount throughout the year, you should update your withholding. Ask your employer for a W-4 form, look at your current information, and make changes as needed. If you received a refund, you can decrease the amount of tax withheld from every paycheck by increasing your deductions, and if you owed tax, you may want to decrease your deductions so that your employer withholds more from each check.
3. Inventory Your Home’s Contents
If disaster strikes, could you easily make a claim for your home’s contents? For many people, the answer is no. To be proactive, you may want to inventory your home’s contents by simply taking photos and making lists of the valuable items in your home. Put these documents in a fire and flood-proof box, or save them in the cloud so that you can access them at any time. Then, every following spring, update your inventory with the new items you purchased throughout the year.
4. Make a Plan to Reduce Debt
Spring is a great time to start thinking about reducing debt, and you may want to explore the snowball technique. With this debt reduction plan, you pay the minimum payment on all your debts, but you send any extra funds to the debt with the highest interest rate. Once that debt has been eliminated, you send extra money to the debt with the next highest interest rate, and you continue this pattern until you have eliminated your debt.
5. Consult With a Financial Professional
To ensure you’re on track with your current and long-term financial goals, you may want to consult with a financial professional. Reach out at spring time to set up an appointment.
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The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.
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