Ah Spring time. Warm weather and longer days.
People also tend to be more motivated in the Spring to organize, clean, and go through things.
While it’s always good to get rid of old stuff and clean your house or apartment, I think it’s also a perfect time to leverage your motivation to give your personal finances a good deep cleaning as well.
Regularly checking up on your finances is important. There are many things you can do to improve your personal finances, but a majority of them are really easy to put on the back-burner. Trust me – “buy life insurance” was on my to do list for two years before I finally got around to it.
Carve out some time this Spring to go through this spring cleaning personal finance checklist. It will help you start doing some things you’ve been meaning to do, as well as give you a check-up on certain things you are already doing to ensure you are still in a good spot.
Check your Net Worth
Checking your net worth can be a painful experience, especially for those who are in student loan or other debt. Even if you fall in this group, though, it’s still better to know where you stand than to be ignorant of your situation.
I have said in the past that for a large majority of people, especially millennials, it’s more important to focus on income than net worth. That’s exactly why it took me so long to get around to signing up for a free Personal Capital account that automatically tracks my net worth. But once I did it felt good to know exactly where I stand at a given point in time.
Tracking your net worth has never been easier. Personal Capital automatically tracks your net worth once you initially link your accounts. If you’re like me you may only check your net worth once or twice a year, but having the accounts linked makes it a lot easier than starting from scratch each time.
Review your Budget or Start Budgeting
One of the things I stress in personal finance lunch and learns or coaching sessions is to not only budget, but to regularly review your budget.
If you haven’t started a budget yet, that’s the first thing you should do. Budgeting can be as hands-on or hands-off as you want. Some people hold themselves to a specific spending threshold while others (myself included) just track the monthly trend and make sure they aren’t spending too much on things they don’t care about (like cable).
I recently released my free automated budget spreadsheet that has been years in the making. If you don’t already track your income and expenses, this spreadsheet is the best way to do it.
If you already budget, take some time to review your monthly spending. Ask yourself these questions:
- Is my spending in alignment with my values?
- Are there areas I can cut back spending on (i.e. restaurants, cable, cell phone, entertainment)?
- Is my current spending habits allowing me to pay down debt or prohibiting me from paying down or incurring more debt?
- What changes can I make to create more cash flow?
While reviewing your budget consider what sort of proactive actions you can take. One example would be to start meal planning and making a grocery list to reduce the amount you spend on groceries. Another example would be to research offers that phone companies are making to see if there are lower-cost options available.
Whatever you decide to do make sure to list it out and make it an actionable item that you can check off once you complete it.
Review your Debt
While Personal Capital does a good job of pulling in your debt, I think it can be valuable to lay out all your debt in a spreadsheet as well. I have a free student loan debt spreadsheet you can use to track your student loans, but you can add non-student loan debt to it as well.
When I’m looking at my debt I focus on a couple things: what type of debt it is and what the interest rate is?
There are different strategies you can use depending on the type of debt, but the first goal should always be to get a lower interest rate. If you have high interest credit card debt it can make a lot of sense to refinance it through a personal loan. If it’s student loan debt there is also opportunities to refinance at a lower interest rate.
Debt can be overwhelming, and I always encourage people to be action-oriented with their debt. Sometimes no action is needed, for example if you have it on auto-payment and it will be done at a specific date in the future (assuming you are happy with the interest rate). Others may want to be more proactive, such as refinancing, increasing their income through their 9-5 or a side hustle, or cutting expenses to pay it off faster.
Analyze your Income
It’s easy to get comfortable in a job and lose a pulse on whether or not you are getting paid fairly. Take some time to review your 9-5 income and give your resume a refresh. Some specific things you can do include:
- Review and compare salary data on sites like glassdoor
- Review job listings on an app like indeed to see what sort of skills employers are looking for
- Update your Resume
Perhaps you are happy with where you are at with your 9-5 and the prospect of switching employers – even if it meant a higher pay – isn’t attractive. Or perhaps you are already maxed out at your 9-5 but still want to increase your income.
If you want to explore ideas outside of your 9-5 income consider starting a side hustle. Start going down this path by reading our Ultimate Guide to Side Hustling or my book Hustle Away Debt.
Check your Emergency Fund
Now you probably don’t need to check your emergency fund. If you have one, you likely know how much it is. If you don’t have one, you also know how much you have.
But when I say check your emergency fund I want you to actually think about whether or not your emergency fund is sufficient. How many months could you live off of it? If your answer was less than three months, it’s time to make building your emergency fund a priority. If you really want to challenge yourself make a plan of hitting somewhere in the six to twelve month range.
If you don’t have an emergency fund then it’s time to get one. I will be the first to admit that building an emergency fund is not easy, especially when you have debt and other things that you want to put your income towards. But I can also tell you that it’s one of the best things you can do for your peace of mind.
Start by setting a realistic goal like saving $100. Then challenge yourself to increase that to $500, and so on. Eventually you will want to have the equivalent of three or more months of monthly expenses set aside, but the important thing is to get started.
Review your Retirement & Health Savings Account
Another thing you should review is your retirement and Health Savings Account. A few things to check are:
- Are you contributing up to your company match for your 401k?
- Whether you have a company match or not, how much money are you actually putting into your 401k and/or IRA?
Are you able to contribute more?
- What investments do you haven in your 401k and/or IRA? Do you need to re-balance it?
I’m all about the “set it and forget it” approach to investing, especially when it comes to retirement accounts, but it is important to check up on them every once in a while, even if it’s just once a year.
Health Savings Accounts, or HSAs, are a relatively new concept but will only increase in popularity over time as the burden of paying for health care continues to shift to consumers. I am all about HSAs and oftentimes refer to them as “IRAs on steroids. I explained in a previous post why HSAs are the absolute best retirement accounts.
If you aren’t contributing to an HSA and using HSA funds for every medical expense possible, you are missing out on some big tax benefits. Even if you can’t max out your HSA, it’s important to contribute something. I would even go so far as argue that you should contribute to a 401k up to a company match and then focus on maxing out your HSA.
Review your Insurance
The last thing on the Spring Cleaning Personal Finance Checklist is review your insurance. Insurance isn’t the most exciting thing in the world, but it serves an important function and can protect you from expensive, unexpected bills – or even bankruptcy.
Take an inventory of your current insurance coverage. How much do you pay in premiums? What are you actually getting in return? Is your coverage adequate?
Many times people don’t realize how much they are paying for insurance because it’s baked into their paycheck, mortgage payment, or is on auto-pay. Understanding the true cost of your insurance is important, if not just to have it as a reference point.
Insurance isn’t all about cost. You can oftentimes get cheaper insurance, but if the coverage is bare-bones you are going to regret it if something big happens. One of my former manager’s house burnt down right after he switched to a cheaper home insurance company. They ended up being very difficult to deal with and caused much more hassle than a different company likely would have. That’s not always the case, but I think it’s important to balance cost with quality of coverage.
Besides reviewing your current coverage it might make sense to add some additional coverage as well. Up until a little over a year ago I did not have any life insurance, but I decided to open a million dollar policy at age 27. There’s many reasons to consider life insurance, but in general if others depend on your income and would be impacted if it were to go away, you should look into getting life insurance.
You can head straight to PolicyGenius to get a free quote or you can read my post about how to get life insurance on PolicyGenius to see how it works.
Want more ideas for how you can improve your finances? Check out our post 40+ Ways to Improve Your Finances This Month
Do you Spring clean? Have you ever gone through and Spring cleaned your finances?
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Great checklist–these are all to-do items that are easy to put off till “later.” It’s funny how we like to procrastinate things that are actually important. While it might not feel like the most fun thing to do, it definitely feels good to have your finances in order and know what is going on!
I’d add that a good way to merge spring cleaning and financial “cleaning” is to shred old bills and documents you no longer need.
My wife and I went through a HUGE shredding/cleanup session around New Years! We put that one off for years but finally went through everything. Would be much easier to do once a year instead.
Great tips DC. We stay on top of our finances pretty regularly so we don’t tend to do need to do much – although we are needing to add more to our EF thanks to a pretty crazy week a few weeks back. That being said, I like your inclusion of income in this. I find that many will often focus on some of the other things and forget income/earning opportunities when it can play a big role in reaching so many of these other areas.
You can always count on me to point out income opportunities ; ) Easier said than done, and some are simply not in a place to focus on that. But it’s worth at least giving some thought and being mindful of potential opportunities.
I try to do this all a few times a year, but I love the process behind spring cleaning your finances!
People just seem to be more motivated in the Spring! I have a ton of yard work to do so we’ll see how long that motivation lasts ; )
Agree with the entire post and also if I am debt free i still have a budget to stick and I ten dto have all my financial documents in order all the year, so I’m already ready for taxes time:P
Most people could benefit from spending more time throughout the year preparing for taxes, so good for you! Tax time can be painful for most people, so anything you can do to get prepared ahead of time is a big win.
Always review your insurance! For auto insurance especially, since many people find they can get a lower rate. Now that I’m debt-free, my focus is on increasing my emergency fund to help prevent having to go into debt again.
Good luck building up your emergency fund! Auto insurance is a tough one for us. Our insurance agent has really taken care of my wife when she’s had issues, including a break-in and an accident. She’s also really responsive regardless of whether it’s the weekend or at night. I don’t think we have the lowest rate possible but we aren’t looking to change our auto insurance. Sometimes great customer service is worth it.
Great list on how to spring clean your personal finances! I definitely have to get on that, as well has spring cleaning my house! Thanks for sharing such a helpful checklist :)
If you had to choose would you choose your house or your finances? I say do both! Glad you enjoyed the checklist!
Great list! Easy enough to complete and it covers a wide view of one’s finances.
Thanks Lisa! I put a lot of thought into this list so I appreciate the positive feedback!
At the beginning of the year I did a budget reset where I adjusted my budget to reflect some life changes. I also took another look at my retirement accounts and increased some contributions.
I haven’t re-evaluated my insurance yet. I think I’ve been procrastinating since it takes a bit of work.
Sounds like you’ve set some time aside for this stuff so that’s great to hear! Always good to review retirement contributions and your budget.
Great checklist of things to do. People often forget to get around to doing this tasks but they are very important to our financial health. Great that you offer spreadsheets for readers so they can see the numbers in one place. That’s also one of the benefits of Personal Capital…rather than logging into all your accounts, you can see them all in one place.
I’m all about the spreadsheets! My goal is for more and more people to utilize spreadsheets and online tools on a regular basis. There’s a lot out there but you really have to set aside time on a regular basis to make it beneficial.
Excellent checklist, I do most of these several times per year. April has been a very interesting month, to say the least. Your section on analyzing your income couldn’t have come at a better time.
Oh I’m curious to hear more about the income analysis and your month! Thanks for stopping by, Jason!