While you’re taking time to clean up your home from the winter, take a few minutes to make sure your finances are in order, too. These simple steps can help to save a lot of headaches down the road.
By Joan M. Kelley, Ameriprise Financial Services
Spring is considered a good time to deep clean your home. To really get your house in order, expand the tradition to include tidying your finances. Doing so can help alleviate stress and give you a sense of confidence. Here are five steps to help you organize and polish your financial life.
• Toss paper and secure passwords. It’s easy to get mired in paper, even in the electronic age. Pull out the shredder and dispose of old bills and notices. If you store passwords on paper, consider moving them to a more secure password storage device for improved security. While you’re at it, change your passwords to reduce your risk of getting hacked.
• Assess your financial stability. Review your personal cash flow by preparing a summary of money coming in and money going out to pay bills, fund your lifestyle and handle emergencies during a set period of time. Calculate your assets and liabilities to get an estimate of your net worth. Watch for creeping living costs and look for opportunities to grow earnings, reduce debt, slash spending and increase savings.
• Streamline cards and memberships. Use those gift cards accumulating in your wallet. Consider eliminating memberships that are not a good value. Close that old bank account if you no longer use it. Revisit rates for insurance policies, cable and phone contracts, and other ongoing costs that may be renegotiated, bundled or improved by switching to a competitor.
• Touch up your estate plan. Update your will or trust to ensure it reflects your wishes. Confirm that your beneficiary designations are current, especially if there’s been a divorce, birth or death in your family. Protect yourself further by assigning a power of attorney and creating a living will and advance directive according to your personal wishes and state requirements.
• Refresh your savings and investments. Make sure your emergency fund is sufficient to handle an unexpected setback. Check in on your retirement savings to determine if you’re still on track. If you’re earning more, consider saving more. Make saving automatic with each paycheck. If you have a 401(k) with a former employer, a rollover may offer more investment options and reduce your fees. Consider diversifying your investments to better align with changes in your life. Spring is a great time to meet with your financial advisor for your annual review and refine your financial plan based on evolving life goals and circumstances.
Joan M. Kelley, CFP®, CPA, is a Private Wealth Advisor with Luminaire Financial Group, a private wealth advisory practice of Ameriprise Financial Services, LLC in Rockford. She specializes in fee-based financial planning and asset management strategies and has been in practice for 36 years. To contact her, visit luminairefinancialgroup.com or 7160 Argus Drive, Suite 102, Rockford.