How To Spring Clean For A Better Financial Life
Clutter is a common annoyance, especially in a busy household. But did you know it sneaks up in your financial life as well? And that it can also cost you money?
“Financial clutter” is distracting and it makes it hard to see the progress you’re making toward your financial goals. It can even hide problems until they become big and urgent. Clutter doesn’t appear out of nowhere. It grows over time, adding another layer of stress to our already busy lives. The solution is simple: Get rid of the clutter. While it may not sound glamorous, it doesn’t have to be tedious or painstaking. But it does need to be done from time to time because clutter won’t go away by itself. And the results are well worth the effort. Getting started is easier than you might think. If you focus on a few key financial areas as part of your spring cleaning, a little bit of tidying up can go a long way toward eliminating clutter. It can also help you refocus and put you in a better frame of mind when it’s time to make important financial choices. Here’s where to begin…
7 Simple and Powerful ways to declutter your Financial life
1. Organize your documents and accounts.
Have piles of statements or documents piled up?
Go through them and decide: Can I set up paperless statements or billing to reduce the clutter? Do I actually need to keep this? If so back it up digitally and file it away shred everything else next review your accounts do you have a bank credit or other account you have you you haven't used in months? If you're paying fees for those considered closing them.
2. Review your beneficiaries
We recommend reviewing your beneficiary and estate documents regularly so that you can make sure that the people, trusts and institutions you have listed still represent your wishes.
If you don't already, we strongly recommend naming a second or contingent beneficiary or representative in case the primary is unable to step in or inherit assets
3. Update your subscriptions
Digital clutter can be just as stressful as physical clutter. And our inboxes are usually Ground Zero for the digital clutter we have to face daily.
If your inbox is overflowing, identify any listserv, subscription, or promotional messages you haven't opened in a couple of months and unsubscribe from them. ( Tip: search for "unsubscribe” to identify promotional messages.) As you do this, organize and/or archive any emails you need to save.
4. Go over your insurance policies
When is the last time you reviewed your policies?
Life, health, and disability policies often get regular attention, but your Auto, homeowner's and other policies need review as well. For example, are you driving as much this year? If not, you might qualify for a better rate on your auto policy. Make some big purchases or upgrades? You want to update your personal property inventory and maybe review your homeowner's coverage.
5 Reconsider your tax withholdings
Don't let the wrong withholding give Uncle Sam a free loan or set you up for a surprise tax bill. Take a fresh look at your withholdings, and think about changes in your family, income, or assets over the past year.
Also, consider any changes you may be planning in these areas this year. All of these can be good reasons to update your tax withholdings.
6. Automate your savings
Haven't reviewed your savings in a while? Now's the time when you have subscriptions that are auto-drafted, it is easy to forget about them and spend more than you intended. On the flip side, automatic deposits into your savings make it easy to save more with less effort.
Explore the options available from your financial institution. Transfers can be set aside from direct deposits or as recurring events at any frequency. You can be set aside from direct deposits, so you are contributing to your savings with every purchase you make.
7. Check in on your financial goals
Financial spring cleaning isn't just about removing clutter and setting up systems. It's also about restoring clarity and reconnecting with the purpose of your financial life.
Take some time to revisit and reflect your financial goals and how they connect to your values. Are you still working towards the same dreams? Do you need to update them or add new ones?
Be sure to celebrate your progress!
We have to maintain our financial lives to sustain and enrich them.
financial lesson: When You Get Rid of the Clutter, You Make Space to Enrich Your Financial Life
Few of us have our financial lives in perfect order.
Even if we get close or we do achieve it, perfect order is never a finish line. It’s a moving target — because life isn’t static. That’s why we have to maintain our financial lives to sustain and enrich them.
If we don’t, financial clutter can build up as quickly as the papers on our desk. It can cost us money, expose us to risk, and stall the progress we want to make toward our financial goals.
Some simple spring cleaning can put an end to that.
It provides an opportunity to examine key parts of our financial lives so we can tidy them up before they get messy. It also helps us avoid overwhelm by giving us a framework to check in, reorganize, and make important adjustments to support our evolving needs and long-term objectives.
This sets us up to be proactive and establish good financial habits. It also gives us new clarity and real control over the trajectory of our financial futures.
And the power of financial spring cleaning isn’t limited to your personal finances. It can extend to businesses, philanthropy, relationships, and beyond.
No matter where you focus your next financial spring cleaning, let’s talk.
Paavan Kotini, CEO & Principal Advisor
Kotini & Kotini