The snow is melting. Flowers are blooming. Spring is here—and for many that means ridding their homes of the cobwebs and clutter that accumulated over the winter.
Spring’s also a good time to give your finances a good scrubbing. A lot may have changed in your life over the past year, and some seasonal touch-up work is a good way to stay on top of your finances and maybe save a little cash in the process. Time to get to work.
Banking
If you’ve moved around a lot, you may find yourself with open accounts at a few different banks—and a pile of monthly statements and other correspondence as a result. Simplify and streamline by consolidating your accounts at a single financial institution. Not happy with your current bank? Now may also be a great time to switch.
Once you have your accounts in order, check in with your bank to see if you qualify for better interest rates or lower fees.
Also, move your banking life online to cut clutter. Many banks offer monthly statements online and give you access to old checks and monthly statements via computer as well. Paying all your bills electronically is another good way to get rid of excess paper.
Credit cards and debt
Haven’t checked your credit score in a while? According to a 2013 study by the Federal Trade Commission, 5% of people have errors on their credit report at one of the three major reporting agencies—errors that might be hurting their score and forcing them to pay more for loans and insurance.
Even a 50-point change in your score can make a huge difference when shopping for loans.
Even a 50-point change in your score can make a huge difference when shopping for loans, and inaccuracies in your credit report can drag your score down at least that much. Pull your reports from all three major credit bureaus, which you can do at AnnualCreditReport.com, review them and ask that any errors be fixed.
Next, take a look at the interest you’re paying on your credit card balances and compare it with other credit cards. Credit card companies are often willing to lower your rates if you’re a longtime customer with a history of making payments on time. It sure doesn’t hurt to ask.
Retirement accounts and investments
Many people have at least one retirement account from an old employer sitting around collecting dust. Instead of dealing with multiple 401(k) accounts, roll them into the one to streamline your retirement savings.
Look at your 401(k) beneficiaries. If you haven’t updated that information in a while, you could still be listing your parents as beneficiaries of a 401(k) you got at your first job. If you’re married and/or have children, you’ll probably want to change that. The same goes with a divorce. You probably won’t want your ex listed as a beneficiary.
Consider increasing your 401(k) contributions. At the minimum, you should be putting enough aside to earn your company’s full match.
Life insurance
Many people think of life insurance as a “set it and forget it” product. They pay the premium but otherwise don’t pay attention to the coverage they chose when they got the policy. And that may be fine if you don’t have any life events that change your insurance needs. But take another look if you:
- Have gotten married or divorced, which means you should update your beneficiaries and check to see if your coverage amount is correct.
- Make more than when you bought the policy, which affects the amount your family needs for income replacement.
- Have had more children, which increases the amount needed cover child care, college and other expenses.
- Have a new mortgage, which changes the amount and length of the life insurance policy you need.
One in four Americans say they need more life insurance, but only one in 10 say they are likely to purchase a policy in the next year, according to the 2014 Insurance Barometer Study by Life Happens and LIMRA. If this is your year to take the life insurance plunge, Life Happens’ Life Insurance Needs Calculator can help you assess your insurance needs.
Give these five areas a good spring cleaning and head into summer with your finances neat as a pin.
