Spring Cleaning your Finances

By Claudia Mollerup-Madsen

Spring cleaning season is here! While you are freshening up your home and cleaning out your closets, take this time to assess your overall financial picture as well. Think about tidying up your budget, your credit cards, and your investments.

Here are some tips to consider:

Clear the clutter and get organized

Pretend your finances are like rooms in your home. Go through your receipts and documents, cleaning out what you do not need. A good rule of thumb is to keep pay stubs, bank statements, home improvement receipts, and utility bills for at least a year and through tax season. After you have filed your taxes, you can shred these documents. For more essential items, such as your tax returns and supporting documents, keep for a minimum of seven years, though many experts recommend keeping indefinitely.

Evaluate your spending habits

Now that you have an organized environment make sure you are to sticking to your 2019 budget and staying financially on track. Look for expenses that can be reduced. For example, you may be able to cancel your cable account and subscribe to a streaming service instead. Or, look for reoccurring charges for phone apps that you do not need. Adjust your budget down if you have less income due to a job change or if you have recently gone from a two-income family to one-income.

Review your credit report and cybersecurity measures

You are entitled to three free credit reports each year. You may access them all from annualcreditreport.com, a government-mandated site. Ensure you comb through your reports to make sure all information is accurate. Just one error can cause your credit score to drop. Take this time to adjust your cybersecurity measures as well. In 2017, more than 143 million Americans were affected by cybercrimes; and it is estimated that cybercrime costs $600 billion annually – up from $500 billion.   Don’t become a worrisome statistic.

Re-evaluate your investment portfolio

The ups and downs of the stock market may have knocked your portfolio out of whack. Check to see if you are diversified and that your investments are balanced appropriately based on your age and desired risk level.

Visit your retirement plan

Spring encourages us to live out our hobbies and enjoy life. Use this time to assess the status of your retirement savings. Do you need to tweak your goals? For example, will you have enough money to maintain your current lifestyle? You may need to be more aggressive with growth investments.  Additionally, take this time to review your beneficiary designations on your retirement accounts.

Do not feel overwhelmed by adjusting and managing your finances. Just as spring cleaning your home brings a fresh perspective for keeping you organized and in tip-top shape, financial assessments can do the same.

Claudia Mollerup-Madsen is Vice President and Financial Advisor with the Wealth Management Division of Morgan Stanley in Houston.

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