How to Start Fresh This Spring
Spring, a season marked by budding flowers, birdsong and rising temperatures, presents an opportune moment to reorganize your financial life. Consider the helpful tips below.
#1 – Check in on your financial plan.
Given the natural evolution of your life and goals, it’s important to make sure your financial plan continues to meet your needs. Dedicate time to reviewing and updating your financial plan, making necessary adjustments to stay on course toward achieving your goals. Your wealth manager will help you understand how changes in your life may impact your financial and investment strategies and can help you update your strategy accordingly.
#2 – Recommit to paying off debt.
If you have high-interest debt hanging over your head, now’s a great time to rededicate yourself to eliminating it. Try to pay a little extra each month on any outstanding consumer debt. Start with the lowest balance item, and once the smallest debt is paid, roll the funds previously used for that payment over to the next smallest debt (and so on) until all debts are paid off. Being debt-free is one of the best ways to achieve financial independence.
#3 – Organize your finances.
Taking time throughout the year to organize your finances can make it easier to file taxes and keep tabs on your financial progress. Consider storing hard copy documents in a locked filing cabinet. Electronic documents can be stored in the online vault of your financial planning software (if you have one), in the cloud or on an external storage drive that’s kept in a secure location. Once you’ve established a system to organize your information, be sure to back up your files on a regular basis.
#4 – Increase your retirement plan contributions.
Even small increases in the amount you save for retirement can make a big difference in your retirement savings over time, thanks to the power of compounding interest. Consider upping contributions to your employer-sponsored retirement plan by 1% to 2% each year. We’d encourage you to set this up automatically through your plan provider. It’s unlikely you’ll even feel a difference in your take-home pay, but your future self will thank you.
#5 – Monitor your spending habits.
If you aren’t currently tracking your household income and expenses, now’s an excellent time to start. Take a look at the last few months’ spending to identify spending patterns. Are there any unnecessary expenses? For example, maybe you (like most of us) are paying for subscriptions you forgot you had and never use. Taking time to locate and eliminate excess spending can give you more flexibility to pay off debt or increase savings.
#6 – Review your credit reports.
Each of the major credit bureaus, Equifax, Experian and TransUnion, allows consumers to access one free report each year. Take advantage of this opportunity to double-check your credit score and identify any unexpected errors.
#7 – Review your beneficiary designations.
Remember that beneficiary designations supersede trust and will directives, which is why it’s essential to ensure your designated beneficiaries are still correct. Doing so is especially important if you’ve recently experienced a major life event, such as a marriage, a divorce or the birth of a child.
#8 – Plan for large upcoming purchases.
If you’re planning to make a large purchase in the next year or so, now’s a great time to make a plan for how you’ll either finance that purchase or pay for it out of pocket. Your wealth manager can help you establish a plan to achieve your purchase goal.
#9 – Take steps to reduce your tax exposure.
Tax planning strategies are most effective when applied consistently throughout the year. Work with your wealth manager to identify opportunities to reduce your tax liabilities through strategies such as tax-loss harvesting, asset location strategies, charitable giving and more.
#10 – Check in on your estate planning documents.
If you haven’t already implemented estate planning documents, it’s important to do so as soon as possible, regardless of your age. Proper estate planning plays an essential role in protecting your loved ones, both after you die and throughout your lifetime.
If you have estate planning documents in place but it’s been a while since you reviewed them, be sure to schedule a call with your estate planning attorney to review your strategies and make sure your wishes continue to be reflected in your existing documents.
