As spring approaches, it’s the perfect time to start planning for spring cleaning — not only for your home but also for your finances.
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GOBankingRates interviewed David Smallwood, a financial advisor with Northwestern Mutual, to gain his insight on how to tidy your finances this year.
Refresh Your Budget
The best budget is the one that benefits you, so you’ll want to make sure that, as your expenses and goals change, so does your budget.
“Take some time to review your income and expenses to ensure you are staying on track with your financial goals,” said Smallwood. “Make clear, sound and realistic financial goals for the year. Break them down into smaller achievable steps.
“For example, if there are any lingering debts generated from the holiday season, consider making it a goal to use Q1 bonuses and/or tax refunds to resolve them before the year reaches the halfway point. And remember, a financial professional can help.”
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Purify Your Financial Habits
Forgotten subscriptions can really add up, sucking money from your budget that could be better used elsewhere.
“Identify subscriptions or expenses that you can consolidate or eliminate to save money,” Smallwood recommended. “If you have a debit card or two that’s used for the majority of your subscriptions, consider canceling it and then re-sign up only for the subscriptions that are necessary. It’s also good to check your Apple or Android App subscriptions regularly to make sure there aren’t trials you signed up for that have become ongoing subscriptions without your knowledge.”
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Organize Your Documents
Being organized is a key part of managing your finances.
“Gather important financial documents like bank statements, tax returns and insurance policies,” said Smallwood. “Put them in a safe place for easier access when needed. I would recommend having a physical copy of all documents to keep in an at-home safe or safe-deposit box at your local bank. It’s also good to have a secure and encrypted copy of all the same documents stored somewhere in the cloud.
“For both the digital and analog documents, be sure to have at least one trusted confidant who has access to the documents. Securing your financial documents in one place will help come tax season. To get ahead of it, create a specific digital or physical folder at the start of each year to store tax-related receipts and documents.”
Streamline Your Investments
Smallwood recommended looking at your investments to see if there are any adjustments that need to be made to keep you on track with your financial goals.
“It’s always good to review investments around tax time, because there may be opportunities to save on taxes based on how your investments performed over the previous year,” he said.
Here are Smallwood’s other suggestions for streamlining your investments:
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“Diversify your portfolio: By spreading your investments across different asset classes, industries and regions, you can reduce risk and potentially improve returns.
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Consolidate your investments: By bringing your 401(k) and IRA accounts into one or fewer places, you’re better able to trace minimum distributions and have an easier time accessing them.
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Automate your investments: Set up automatic contributions to your investment accounts. It can help you stay disciplined and consistent with your investing strategy.
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Rebalance regularly: Periodically review and adjust your investment portfolio to maintain your desired asset allocation. It can also help optimize returns and manage risk.”
Use the Right Tools
“Finally, there’s no substitute for a financial professional,” Smallwood said. “A solid one will work with you with each of these steps. Consult with someone who can work with you to build that pathway to financial prosperity. The right financial professional can act as a strategic breakthrough partner to help you achieve your wealth-building goals.”
And if you’re not quite ready to work with a financial advisor, Smallwood said that there are online platforms, robo-advisors and financial apps that can help you with tasks such as analyzing performance and making informed decisions.
“My recommendation is to find interest and desire to work with a financial professional,” he said. “While there are tools that are helpful, there’s no substitute for a partner who can work directly with you on your individual needs.”
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This article originally appeared on GOBankingRates.com: Spring Cleaning: 5 Ways To Tidy Your Finances for 2024
