Many people use spring as an opportunity to clean their homes — to clear out the clutter and prepare for sunny days. But it's also a great time to make sure your finances are in order. Tax season has most of us digging into our finances already, so why not take it a step further and get your finances organized, assess your overall financial health, and check in to see how you're tracking toward your financial goals.
6 ways to clean up your finances this spring
1. Order your credit report and fix any errors
A Federal Trade Commission (FTC) study found that one in four consumers has an error on their credit report that could affect their credit score. To help consumers fix these errors, the government requires each credit bureau to give one free credit report to each person every year.
You can access your credit reports from Equifax, Experian, and Transunion for free at AnnualCreditReport.com. After reviewing your credit report, you will be able to dispute incorrect information online on each credit bureau website or you can mail in your dispute.
2. Reevaluate credit cards that charge a fee
Paying an annual credit card fee is not a bad thing if you're getting a lot of value from the card. But you may not be. Evaluate the benefits you're receiving from the card against what you're paying in annual fees. If the benefits don't compensate for the fee, it may be time to reevaluate.
You can also call your bank and ask if they can waive the annual fee. You may get all or a part of the fee waived. You may be able downgrade the card to a no-fee version to keep your payment history active on your credit report.
3. Avoid new credit card debt
Studies show that people who use credit cards spend more on average than those who use cash or a debit card.
The envelope system is popular with people who are paying off debt because their spending is limited in each category of their budget by the amount of money in each "envelope." This can be done with actual cash or online by using digital tools that do the tracking for you, which is our preferred method.
4. Check subscription services
Unwanted and unused subscription services can take a bite out of your wallet each month. Signing up for free trials can lead to recurring charges if you forget to cancel. If you agree to a free trial, set a calendar reminder to cancel it before you are charged.
You may also be paying for services that you no longer use or need. There are some services that will identify recurring charges like Netflix, Hulu, and Spotify on your accounts. If you're no longer using them, they'll cancel them for you (for a fee), or you can cancel them yourself.
5. Increase your retirement contributions
Many companies announce annual pay increases in the first quarter of each year. This is an excellent time to set aside a portion of that bigger paycheck towards retirement.
A Fidelity Investments study found that a 1% increase in retirement contributions starting at age 35 results in an additional $85,492 for the average investor. Imagine how much extra you'd save if you increase your retirement contributions by 1% every year. Those small changes can make a huge difference in your retirement.
6. Review your spending plan
Creating a "budget" can sound restrictive. That's why more and more people are developing "spending plans" for their money. Taking control of where you want to spend your money puts you in charge of your finances. Review the money you have to spend (e.g., housing, loan payments) versus the money you choose to spend (e.g., dining out). Then choose to be intentional with your money so that your spending aligns with your goals.
Spring into financial health
While you're creating a fresh new look around your home, take some time to also clean up your finances and update your money habits so that they're working for you, not against you. Each of these tips takes just a few minutes to do, but they result in big steps forward for your finances. Once you're done, sit back, relax, and enjoy the progress you're making towards your financial goals.