To get on track and start fresh, a yearly intense cleaning, also known as the spring-cleaning of your home, is the best way to get your house in order. Just like spring-cleaning your home, people also get a great opportunity to give their financial house or money related issues a new beginning. It is an opportunity to get your finances under control and set your expenses according to your needs. Moreover, with that opportunity, you can set yourself up for financial independence.
Tidying up your finances from the start helps you reach your financial objectives more rapidly. Whether your goal is to set aside some savings for emergencies, a big purchase, or retirement, or you want to cut spending, spring-cleaning your financial house will help you get your budget under control to make it work better for you. Here are five financial spring-cleaning steps to take to get your budget under control.
Clean Out Old Financial Documents
To start fresh, you need to dispose of those old financial documents. The money related records, slips, and reports that you have been collecting or putting aside for some time should be reviewed and disposed of safely. When you sort out and get rid of the old documents, you can then focus on the financial documents that are current and essential to your finances today. Important documents would include canceled checks, financial assessment forms, and documents with tax details. To dispose of these unneeded documents, you should invest in a shredder to protect your identity and steal financial records.
Organize Your Expenses
For a good spring-cleaning of your financial house, you need to keep up with your accounts to be aware of your spending. You should also have a budget and ensure that you are honestly accounting for every penny you spend. When you follow your spending or set a financial plan, you need to organize your expenses so you can live within your means and eventually go beyond and have a worry-free financial future. There is budgeting software available as well as templates.
Audit Your Will and Beneficiaries
Making and auditing a will and beneficiary plan is how you can pass on your assets and resources to your loved ones. A will is something that most people don’t think about after they have it drawn up. However, because life and the events in it can change, you should include an audit of your will in the spring-cleaning of your financial house. This audit should also include a power of attorney and medical power of attorney to ensure these important decision-making responsibilities are in the right hands.
Audit Your Insurance Coverages
Financial spring-cleaning is the right time to evaluate and audit all your protection inclusions for your entire insurance coverage. This audit is the perfect opportunity for you to evaluate your insurance costs and ensure you are not overpaying on any of your premiums.
This audit is also the opportunity to evaluate what is covered and if you need to add coverage or take some off of your plans to save money. An audit of your insurance coverages is meant to let you know you are being covered correctly for you and your needs. Doing this audit once a year will allow you to look over the previous year and inform you of what you do or don’t need.
Audit Your Retirement Plan
The auditing of your retirement plan is similar to the other audits suggested. This retirement plan audit helps you determine if you can contribute more to your retirement plan or if you need to contribute less for some financial relief now. It will also allow you to research and ensure you receive every available benefit your company offers, including contribution matching.
It is very important that you keep your accounts, expenses, and budget as your top priority throughout the entire year when it comes to your finances. Then, once a year, you should go through a financial spring-cleaning so you can assess everything and make adjustments that are in your best interest, as needed.