How to Spring-Clean Your Finances
Weed out and straighten up your financial clutter with these six simple tips.
A version of this article originally appeared on Learnvest.com.
Spring cleaning is simultaneously awesome and awful, isn’t it?
You probably have to give up time you’d far rather be spending outside, where it’s finally sunny. Yet there are few things better than that amazing, fresh-start feeling you get from blowing the dust off everything.
Guess what? The same can be true when it comes to your money.
Just like how now can be the perfect time to clean out your closets, it’s also an ideal time to consider organizing, simplifying and helping set yourself up for months of financial success.
To save you time, we asked financial advisers around the country for their best advice on how to spring-clean your finances. Consider trying these tactics to do a quick spruce-up.
Create an ICE Folder
If you’re the money manager of your household, you owe it to the people you love to put together a folder of information that
will help them figure out how to handle your finances in case anything happens to you. This is your “In Case of Emergency,”
or ICE, folder.
“Include all of the info someone would need to manage your finances, such as your account numbers, login IDs and passwords, a list of bills you pay each month, investment and retirement fund info and anything else that would need to be handled in your absence,” says Tyler Gray, a financial adviser with SageOak Financial in Tulsa, Oklahoma. This can be a literal folder or a folder on the desktop of your computer. If you go for the more high-tech option, make sure to rename the folder something innocuous (perhaps not “All Financial Documents Here,” for security reasons) and fill your partner in on the folder’s alias.
If your partner or someone else handles your finances, ask that person to create an ICE folder for you. Morbid? Maybe a little, but this step could make life a lot easier in the event of an emergency.
Break Out the Highlighters
Jeff Motske, CFP, President and C.E.O. of Trilogy Financial Services in Huntington Beach, California, says spring is a great
time to take a closer look at your budget—and one way to do it is to go old-school.
“Get your credit card statements from the past six months and three different color highlighters,” suggests Motske. “Then use one color to highlight your necessary costs (utility bills, insurance, groceries, toiletries), another to highlight items you bought because you really wanted them (your Netflix subscription or the new vacuum cleaner that’s easing your allergy symptoms), and another to highlight less thoughtful purchases (that round of drinks you bought at happy hour).”
“This exercise is usually eye-popping. Most people don’t realize how much they’re spending on stuff they really don’t need or want,” he says.
After highlighting your “problem areas,” take them high-tech by connecting your accounts to the LearnVest Money Center. Once it’s set up, tuck those highlighters in a drawer—the Money Center’s Inbox, which looks a lot like your e-mail inbox, will import all of your spending and saving data to help you track your progress. You can even categorize what you spend into folders like “Groceries” or “Travel” or “Pet Supplies,” then set budgets for each folder and get an automatic update on how much money you have left to spend. Come next spring, you’ll have a record of the year’s spending and can even see how your spending has “trended” over time.