You may have a house spring cleaning regimen in place to clear out the cobwebs in your home and ready it for summer. But have you ever thought of applying this concept to your finances? Spring cleaning your finances each year will give you a similar “clean” feeling, as well as netting some pretty significant savings.
Financial Spring Cleaning
Here are some tips for “financial spring cleaning” you can use:
1. Review Monthly Bills
Sit down with all your monthly bills, plus your bank and credit card statements. First, if you notice any maintenance or service fees, address them. Call your provider or bank to find out why these charges are there and do what you can to get them removed. You may need to suggest you’ll do your business elsewhere. Also, consider dropping monthly expenses such as your gym membership, and see if you can get by with fewer TV channels. Remember that regarding any bill, it never hurts to ask for a discount.
2. Check Insurance Policies
If you’ve had a major life event recently, such as the birth of a child, a marriage, or a divorce, your insurance rates could be affected. Contact your agent to see if there’s a way to save. You can also save by increasing your deductibles, especially if you’re a safe driver. If you have individual policies with multiple companies, consider bundling them for a discount. Lastly, it’s a good idea to annually shop the competition for lower rates.
3. Review Your Retirement Plan
If you’re currently saving for retirement, great! But how do you feel about your investments? Do they match your priorities and goals? How have they been performing? How low or high are their expenses? Are you well-diversified?
By regularly reviewing your portfolio, you may be able to increase your long-term ROI. That said, don’t sell long-term investments just because the market is having a down year. Buying and holding solid investments is a proven strategy for the casual investor.
Organizing your personal finances is another way to get more out of them. If you have a filing system in place, clean it out. But be careful about what you discard. Many documents, especially tax-related items, should be maintained for at least three years, and some should be kept indefinitely.
If you don’t have any organizational system set up, implement one. Create files for your taxes, financial and insurance statements, and legal documents, including your will and home rental contract. Alternatively, you can create and maintain a filing system on your computer – just be sure to back it up.
5. Adjust Due Dates
If you have a hard time remembering when certain bills are due, see if you can adjust your due dates to better fit your schedule. Many credit card and insurance companies will give you this option, as will some utility providers.
6. Consider a Balance Transfer Credit Card
If your credit card debt is spread out amongst a variety of cards, consider a credit card balance transfer. This way, you can consolidate all your balances into one which frees you up from worrying about multiple due dates. Plus, there’s a good chance you can transfer to a card with a low or 0% APR.
Since you’ll be charged a 3% to 5% balance transfer fee, be certain that the added convenience and what you’ll save in interest justifies the move. Also, keep in mind what the interest rate adjusts to after the promotional APR ends – especially if you’ll be unable to pay the balance off by then.
Cleaning anything can give you a sense of accomplishment, and when you spring clean your finances, you have the opportunity to make better financial decisions and reduce stress as well. If it’s easier for you, set out to accomplish one task per day for a week. Before you know it, you’ll have a better grip on your finances – and may save a bundle of money in the process.
What other ways can you think of to spring clean your finances?
David Bakke shares his tips for saving money and building wealth through investments and small business on Money Crashers Personal Finance.