Financial Spring Cleaning Checklist: 9 Crucial Tasks

Michael QuanAutomation, Education, Habits, How to, Misc, Taxes14 Comments

Some links below may be from sponsors. Please see our disclosure for more info.

I love springtime!  The weather is perfect, the days are getting longer, and there’s green everywhere. More importantly, the fish are starting to bite more actively… haha.

We seem to be turning the curve with COVID-19 which is fantastic. However, a lot of us are still home waiting for more widespread immunity. What else could you do in the meantime?

How about some good ole fashioned Spring Cleaning. Do you do it? How about adding some money to the mix!?

Yup! I’m encouraging a little Financial Spring Cleaning right about now. It’s a great time to review our finances and get our financial house in order.

But don’t worry, it doesn’t need to be boring.

Financial Spring Cleaning Checklist

drawers

First of all, let’s not make financial spring cleaning into a chore.  Consider it an opportunity to make things more efficient and lighter.  I think life’s best things are simple.

Your finances should be simple as well in order to increase your likelihood of managing it effectively.  The less you have to manage, the more time you have back for things that matter most (i.e. family, friends, etc.)

Here’s a quick financial spring cleaning list of some tasks/todos that will have a positive impact on your personal finances:

1. Review Your Financial Accounts

One area of review is taking an inventory of all of your financial accounts.  This can be accomplished in a few different ways, but I like to use Personal Capital to consolidate all of our accounts into a single view.  Alternatives include using your bank’s website, Mint.com, etc.

Once you have this comprehensive list, consider if any accounts are extraneous, or inefficient.  It’s easy to have different accounts lying around after many years, or even when you consolidate your finances with a spouse.  But, don’t let the clutter blindside you.  You may have fees you’re paying that you don’t need to, or you may be able to consolidate some bank accounts to gain additional benefits.

If you find credit cards you don’t use, don’t cancel them.  It’s best to just put them away in a draw out of sight because canceling them could impact your credit score (in a bad way).

Finally, if you’d like to take it one step further, consider creating a money map to get a comprehensive view of your personal finances.

2. Put Your Stimulus to Work!

If you received a stimulus (or are expecting another), take this time to put some or all of that money to work.  Best uses include:

  1. Paying for outstanding debt (highest interest notes first)
  2. Creating an emergency fund (if you don’t already have one – I personally like an entire year’s worth of expenses, but you can likely get by on 3 months worth)
  3. Investing in your 401K, 403B, or Roth IRA – I won’t get into all the details here, but if you have the ability to contribute to a tax advantage account, or receive a match from an employer, it’s time to get a piece of your pie!  All too often I would see my former employees ignore free money – don’t be like the masses… make your move!

What I would NOT suggest is using this newfound money to purchase unneeded “stuff”.  If you really have excess $$ from the refund, then fine… use up to 15% of it, if it makes sense.

We are using our next stimulus check to pay for real estate rental furnishings.

3. Organize Your Financial Documents

Getting your financial documents in order can save you countless hours of wasted time sorting and looking for documents.   In fact, I wrote an entire post about organizing your financial documents here – How to Knockout Financial Clutter For Good, but it bears repeating and will save you A LOT of time over the entire year.

Also, don’t forget to get rid of unnecessary documents you no longer need.  Here’s a quick reference on how long to keep financial records.  (This, of course, may be different in other countries outside of the U.S.).

With that said, a lot of companies are already forcing you to go paperless. This is great for the environment, however, don’t forget to look at your statements! I know I’ve been guilty of this too. And, when I remember to review them, I’m always thankful because I have a better picture of what I spent, how I performed, etc.

4. Review Your Portfolio Allocation

If you already have a stock or fund portfolio (IRA, 401K, 403B, etc.), you should consider reviewing your asset allocation.

Check out Sam’s article from Financial Samurai here on – The Proper Asset Allocation of Stocks and Bonds By Age.

5. Review Your Overall Asset Allocation

If you are further along in your wealth-building, don’t forget to review your Overall Asset Allocation.

If you’ve read my blog for a while, you’ll see that I have a bias towards real estate as an investment class.  But, everyone is different.  Just make sure your current assets are distributed according to your own comfort with risk.

6. Review Your Credit Score

Here’s a simple, but often overlooked one.  Take time to review your credit score and ensure it looks accurate.  The worst thing is to not pay attention to this important score and find out after the fact that your identity has been compromised, or that there is a reporting error and your credit score is “messed up”.

Your credit scores ultimately determine your likelihood of receiving financing, and/or the rates you will get charged.  Don’t be fooled.  A half of a point (0.5%) on a mortgage can mean a huge difference over the life of the loan.

Want to take it one step further?  Learn how I maintain an 800+ credit score consistently using free tools on the Internet.

7. Review Your Insurance

Okay, so this one may be a bit tedious, but it’s well worth the time and effort to address it.  Insurance is a huge component of building a strong “financial house”.

What changes have happened recently?  Has your family grown?  What would happen if an “unexpected” event struck?  Would your family be protected, and to what extent?

I typically will review auto policies, life policies, casualty, and healthcare around this time.

My friend recently turned me on to a new site (LEMONADE) that will give you a quote FAST. And it has a great user interface.

8. Update Your Budget

Finally, if you don’t already have a budget, this should be the year you GET ONE!  Not sure how to go about doing it?  I’ll break it down for you step by step… and even show you the “easy” way!

How to Budget Like a Badass (Part 1)

How to Budget Like a Badass (Part 2)

Remember to pay attention to recurring services or subscriptions you have… those can add up quickly!

9. Ask For a Raise (or, Prepare For One)

Saving a large percentage of your income is much easier to do when you have a larger income.  So, I like to focus on this end of the equation when I’m able to.

If you have a mid-year review (or whenever it may be)… the time to prepare is now!  Show your employer your value by standing out from the crowd.  If you own your own business, provide a service or product that is better than your competitors.

The rewards are distributed disproportionately at the top, so shoot for rock star status!  The truth is it’s not that hard to perform when most people are content to settle.  Don’t follow the crowd.  Become a leader and you WILL command a premium.

Final Thoughts

I wouldn’t try tackling all of these at once.  Rather, focus on getting a specific one completed before moving onto the next.

And, I would try to tackle as many as you can before the season changes yet again (if you don’t set a deadline, it likely won’t get done!).

Not only will you feel great when you get through this financial spring cleaning checklist, but your finances will also thank you too!

The financial results that we desire are always controlled by our actions. Let’s use the Spring to our advantage.

Readers, what other financial spring cleaning tasks could you do?  Which ones listed would be the most impactful for you this year?

Follow me

14 Comments on “Financial Spring Cleaning Checklist: 9 Crucial Tasks”

  1. Michael – I love that you included “Ask for a Raise”

    There is not nearly enough people that do this. Yes, it can be akward, and it is nice to believe that our bosses and the companies we work for will look out for us. But the reality is that no one is going to care about you as much as YOU!

    People that ask for more money…make more money!

    You get much better at this over time with more experience. Just like anything in life it takes reps. The other problem I see is that too many people settle for what they are given, regardless of what they may have earned.

    Don’t settle for 2-3% annual raises…I would rather get a kick in the nuts.

    Since graduating college and entering the workforce full time in 2008, I have averaged annual increases of greater than 20% a year. Just think at 20% you are doubling your income every 3.6 years. At 3% it is going to take you 24 years to double your income…that is a huge difference.

    1. Dom, you’re an incredible example of someone who goes after the “prize” without hesitation. If more young professionals would emulate your model, they would get past their limiting beliefs about “how things work” in the corporate environment. They would begin to see you can make up your own rules along the way AND help their companies succeed faster!

      My first year I had a job (2002) I made $42k and thought I was getting a steal. Once I realized I was bringing a lot more value to the table, my confidence grew quickly. I asked for a 30% raise the very next year! (We settled at 25%). If you don’t ask, you won’t know. 🙂

      1. Nice job Michael!

        The worst they can say is no. And in reality if you actually did the work to earn it, the more than likely to give you at least part of your ask.

        I had a friend I recently coached to ask for what she was worth. This is someone that is super smart and has climbed the latter in title and responsibility very quickly. She is one of the youngest accounting controllers I know. However, she was underpaid by about 30% vs. what she could get if she left the company…she didn’t want to leave the company.

        Her plan was to see what she got come annual review time and if it wasn’t anything close to what she thought she had earned, she would then ask for more. Annual reviews took place and she got a very small raise compared to what she hoped for.

        Now her plan was to go in and ask for half of the gap between what she was earning and what the market supported (which was 30-40% higher). So her plan was to go in and ask for a 20% raise. Through our pep talk I told her that she needs to go in and ask for the high end of 40% (90th percentile). I explained to her that she is a high performer and delivers value in that quartile and therefore should be compensated commensurately.

        I also explained to her the “she just might say yes” philosophy. And the fact that they was a high chance that there would be a negotiation that takes place that would end up with something higher than her 20% but lower than the 40% ask.

        She went in to the meeting with her boss with confidence and the facts that she was worth more based on the market, her performance, and the value she has added.

        She ended up getting a 40% raise.

        It was akward, but she feels like a million bucks now. She will not ever settle for less than she is worth ever again.

        Cheers!

  2. Good tips Michael!

    When I was telling people how annoyed I was that we got a huge tax refund($4k) this year, they were pretty confused. Most people see it as a windfall, and I just see it as an extra $333/month that we could have used throughout the year if we did our withholding correctly. I took 100% of the tax refund and put it towards maximizing my Roth IRA for the year.

    Love Personal Capital and love how a lot of credit cards now have credit scores. 🙂

    1. Nice job Vic with allocating your refund towards your Roth!

      I agree with the large tax refunds… it’s not a good thing per se. In fact, I meant to write in the post about how you should review and potentially change your withholding status as part of this spring financial cleaning process. Most people don’t realize you can update this. 🙂

  3. I should definitely review my insurance, thanks for the reminder. Sometimes a simple call to your auto insurance provider “hey do you have a lower rate I can take advantage of” is all it takes.

    I haven’t done this yet for my rental property insurance companies, and those rates have slowly crept up over time. I’m sure a little comparison shopping will pay off well.

    1. Hey Brian, you’re absolutely right! All it takes is a simple phone call to get better rates.

      Luckily I haven’t had too much creep on my rental property insurance. But, it did happen once where it was noticeable and it prompted a change that year.

  4. I did my big financial ‘cleaning’ during the Thanksgiving holidays. It helped me so much to prepare for tax season, and now I have a list of things to do this year to be prepared to do taxes and pay off debt! It helped to set up Personal Capital and Mint to early and then evaluate the results. I’m blogging now at my site. I also reviewed my insurance – I drive my car 1x a week now, less than 10 miles! Definitely a money saver.

    As for the raise, I’d love to hear more about negotiation! What type of language to use, and the answer to the age-old question – is it better to state a number first or wait for them to state a number? I think it might differ depending on if it’s a new job or a raise?

    1. Thanks for the comment Anastasia! That’s great that you do your prep to help with your tax planning… another great time to do a review of our finances.

      As for the raise, I had a annual review meeting planned. So, I came in prepared with data from several different sites and publications noting what other people were getting paid in similar positions. Of course there is a delicate balance to be had when negotiating, so I always like to have a specific number in mind that would make me happy vs. a number that would trigger a change. Once my review started they showed me the adjustment they wanted to give me. I basically said, “I appreciate the adjustment, but honestly I feel like I’m worth more at this point. Here’s why…” And then I’d present my data.

      When I used to have employees I definitely knew who the “great” ones were. If they ever asked me for a raise, I’d do it because they were already providing so much value to my organization. However, if they weren’t performing to my expectations, I’d tell them, “Sorry! (go pound sand… I was thinking)”

      Finally, if you’re the one asking for the raise, I don’t think it’s wrong to throw out a number (on the higher end to start)… especially if you know you’re worth it. 🙂

  5. You’re page is fast turning into one of my favourites Mike 🙂 ha!
    It’s a shame that it’s now autumn (fall) down under although that’s okay, the weather is still decent for now & I’m heading to a European summer for our coldest part of the year (even then it’s still about 45 degrees Fahrenheit at it’s coldest)

    As for spring cleaning, definitely asking for a raise or becoming more effective at how to generate online income will be big for me

    I do love spring as well btw, what’s it like in your neck of the woods in Spring? 🙂

    1. Thanks Jef! Have I made it to your favorite bookmarks yet? 😉

      It’s great that you can head to Europe for the colder part of your year, tho it doesn’t sound that cold…haha.

      I’m pretty spoiled out here in San Diego. Typical weather during the springtime is low 70’s, sunny, and an occasional light breeze. Love it!

  6. Haha you’re definitely there.. You’re a big motivator to continue to challenge myself with investing as I’m keen to get into work of purpose and more significance sooner rather than later 🙂

    Nice man, sounds similar to Sydney, I’ll have to come visit someday! You’re welcome in Sydney too if you make it here

  7. There’s a lot of maintenance activities that you have to do in the world of personal finance, like spring cleaning. Good list. I like the asking for a raise. It’s time employees take the helms and actually ask for what they should be paid. No point of giving more productivity if there’s not going to be additional pay.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.