12 Financial Steps to Success This Spring

Spring cleaning may mean clearing out your wallet or pocketbook as well as your closet.

 

In the spirit of renewal, here are 12 financial moves you should make this spring. There are or should be some annual rituals. There are other tasks that we put off, but we shouldn’t.

1. Revisit your resolutions

Many of us have set New Year’s resolutions for 2024 around spending and saving, borrowing and earning, but very few of us followed through on them.

“For a lot of people, the top money goal was paying off credit card debt or starting an emergency fund,” said Kimberly Palmer, personal finance expert at NerdWallet. Spring is “the perfect time to see if you’re making any progress,” he said.

And what if you’ve made zero progress?

“For those of us who have strayed off track, there is something called a reset button,” said Ashley Foulkes, a certified financial planner in Birmingham, Alabama. “Spring provides the perfect opportunity to pick up where we left off, without dwelling on regrets.”

 

2. Clear out your financial ‘junk drawer’

Spring brings a chance to sort out that drawer – or box, or unused corner of the dining room table – where you stash financial paperwork to deal with at some unspecified future date.

 

“You know what I’m talking about, you throw all your statements and bills in there with the intention of settling them later,” Foulkes said.

 

Working through neglected papers is a great way to reduce financial stress, she said. Throw something away. File something away. Deal with the rest somehow.

3. Start 2024 Tax Folder

Speaking of papers: If you haven’t already, consider setting up a folder to store all your tax documents for 2024: receipts, donation forms, and anything else you need to report or file. It is essential to plan the cuts. Even better, set up a physical folder and another folder on your laptop, says Jeff Farrar, a certified financial planner in Shelton, Connecticut.

 

4. look at that stop

While you’re at it, look at your W-4 form and make sure you’re withholding the correct amount from your paycheck.

“Since taxes are on our minds with April 15th coming up, why not better prepare for next year’s taxes?” Farrar said.

Will you get a refund next year, or will you still owe? Most of us have more control over that question than we think, said Jeff Jones, CEO of H&R Block. You may want to get a larger tax refund to help your family’s cash flow. You may prefer to limit your withholding so you can keep more of your pay until tax time. The decision is yours.

“Generally, you can really control the outcome,” he said. “We try to remind people that this is really a choice you can make.”

 

Most of us have a fairly predictable income. Take a look at some of your last tax returns. Study the patterns. Are your earnings going up, or down? Again, consult a tax professional.

Taxpayers’ straightaway returns “can be more under control if they get some expert help and think about blocking out changes to their W-4 at the beginning of each year,” Jones said.

5. Talk to your tax preparer

More broadly, spring is a good time to have a conversation with the person who prepares your taxes.

“Besides housing, taxes are most people’s biggest annual expense, so it deserves more attention than just getting your W-2s and 1099s together and sending them out,” says David Flores Wilson, a certified financial planner in New York.

 

“Our advice is to have a thoughtful, proactive conversation with an accountant, CPA, or financial planner after the spring tax deadline so you can strategize what you can do in the rest of the year to minimize your taxes before next spring. Can,” he said. Said. “There may be deductions or credits you don’t know about.”

6. Maximize your retirement planning

You can contribute to an IRA through April 15 and roll the money toward your 2023 savings. The contribution limit for 2023 is $6,500 if you’re under 50, $7,500 if you’re older.

Even better, get an early start on contributing to your IRA for 2024. The longer the money sits in your retirement account, the more interest it can accrue.

“There is a 15-month window to make IRA contributions for any given year,” said Mary Ryan, certified financial planner at Vanguard. “The sooner you make it, the more you benefit from the compound effect,” earning interest on both the money you save and the interest already earned.

 

Spring is also a good time to challenge yourself to contribute to a workplace 401(k), Wilson said.

Those plans have higher contribution limits: $23,000 in 2024, plus an additional $7,500 if you’re age 50 or older.

“Maximizing 401(k) contributions can lower your taxes and get you closer to financial freedom,” Wilson said. “Our advice is to increase your contribution a little bit every couple of months, to an uncomfortable level, then back off a bit.”

Not saving for retirement? Now is a good time to start.

“Even if you can only save a little right now, it’s very important to get started, because you want to give your retirement savings time to grow,” said Terry Fiedler, president of retirement services at CoreBridge Financial, a financial services company in Houston. “Ideally, you’ll contribute enough to at least maximize the amount your employer will match. And if you’re not there yet, look for opportunities to increase your contribution over time.

 

7. Name your beneficiaries

Most retirement plans and life insurance policies include beneficiaries: people who get the money when you die.

 

Many of us delay in naming them. In the spirit of spring cleaning, why not name them now?

8. Dust off your estate plan

Speaking of beneficiaries: Experts recommend that anyone with an estate plan should review it every year, or at least any year when a major life event occurs, such as a job change, marriage, divorce or Arrival of new baby.

“Estate planning is not something you can set and forget,” Ryan said.

Consider whether you need to update any parts of the plan, including your beneficiaries.

9. Book your 2025 holidays in 2024

Experts say planning holidays a year in advance saves money and gives you more options for flights and accommodation. And then there’s the psychological value.

“Studies have shown that the anticipation of a vacation is half the mental value you get from it,” Farrar said. “So, enjoy this summer’s family vacations, but also add next year’s vacations to the calendar.”

While you’re at it, she said, “Take out your passport and check the expiration date. There’s nothing worse than getting ready for an international vacation and realizing your passport is about to expire.”

 

10. Review your investment portfolio

“You don’t need to monitor your portfolio on a daily basis, but spring is an ideal time to review your asset allocation and make sure it suits your needs,” Farrar said.

Your mix of stocks, bonds, and other investments may fluctuate over time, and your portfolio objectives change.

“Check to see if your allocation to stocks versus bonds is where you want it,” says Maureen Demers, a certified financial planner in North Andover, Massachusetts.

 

11. Invest in high-yield savings

The yields on savings accounts, certificates of deposit, money market accounts and other savings instruments have generally increased over the past year or two, along with interest rates.

 

Still, many people “are still holding large cash balances in sub-optimal, low-yield vehicles,” Wilson said.

If your savings aren’t earning 5% annual interest, or close to it, consider transferring the balance to a higher-yield account.

Increasing debt: Our credit card balances are at risk of eroding our savings. Here’s how to deal with both

12. check your credit card

Credit card debt is also increasing along with credit card interest rates. Now is a good time to take a good look at your card, Palmer said, especially if you carry a balance from month to month. Key Question: “Are you paying more interest than you think?”

 

Credit card rates change over time and recently they have been increasing.

If the APR on your card is increasing, Palmer said, it may be a good time to shop for a new card.