Spring Clean Your Finances

Spring Clean Your FinancesThese past few weeks, you’ve probably gone through your receipts and records, looking to finish up your tax return. The warmer weather may also have you in the mood to do a little spring cleaning – namely with your finances.

When it comes to money management, spring cleaning pretty much means getting rid of paper clutter, reviewing your fiscal status and taking action when called for. Here’s what you can do to put your financial house in order.

File or Discard Documents

There’s no reason for your paper pile to be any taller than necessary. First, go through your documents and evaluate what you should keep and file. LearnVest says that a good rule of thumb is to keep tax records for seven years, pay stubs and bank statements for one year and credit card statements for at least 45 days. Then start tossing paperwork you no longer need – especially easy at tax time, since you’re already going through your files. “Now is the time to shred any old financial documents,” according to CPA Mike Falco in Learnvest.

Review Financial Goals

Fox Business urges you to take this time to “review your financial plan and make sure your goals are still valid and reflect your current life situation.” Based on your assessment, you can make changes as necessary, the site says. And, Fox adds, if you don’t yet have a financial plan, there are tools online  to help you create one.

Review Insurance Coverage

Kiplinger recommends checking your insurance policies for any coverage gaps that you may need to fill, such as liability, flood or earthquake coverage. You’ll want to do this particularly if you’ve recently had a life change, like a new child. Also, Kiplinger suggests that you consider whether you may want to raise your deductibles to lower your premiums.

Review Credit Report

A good habit to get into: Check your credit report once a year. And it just so happens that, once a year, you’re entitled to a free one from each of the three credit bureaus – Equifax, Experian or TransUnion. You can also check your credit report for free annually from each of the three credit bureaus at AnnualCreditReport.com. Once you’ve got the report, “check for inaccurate information like debts that are listed as outstanding rather than paid, as well as out-of-date credit cards or loans that haven’t been reported as closed,” Fox Business says. If you have any negative marks, Fox urges you to have creditors correct the record or work with you to resolve any legitimate issues.

Rebalance Portfolio

“You can’t take the ‘set it and forget it’ attitude with your retirement savings,” says Ameriprise financial advisor Rita Cheng in U.S. News & World Report. She notes that this can result in a portfolio that’s either too passive or too aggressive. Cheng recommends rebalancing your investments based on your age and desired risk levels.

Deposit Extra Cash Into Savings

Getting a tax refund for last year? If so, “dump it into a savings account before you’re tempted to blow it,” says Aol Daily Finance. Of course, Aol notes, now’s also the time of year when you may be making another savings deposit: to your IRA. While it’s too late now for a contribution to count toward your 2012 tax return (the deadline was April 15), it’s not too soon to get a jump start on your 2013 IRA deposit.

And if you decide to take Aol’s advice, keep in mind that Ally Bank offers plenty of places to put your savings, as well as your IRA contributions.

Will you be spring cleaning your finances? What will be your biggest priority?

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