Spring Cleaning; a Financial Mindset

I’ve spent the past few weekends “spring cleaning” my house – going through belongings and collecting items that can be donated, organizing that corner of the house I often forget exists, and sweeping and dusting everything in sight. When I finished, I sat in a rocking chair on my (recently cleaned and tidied up) front porch to admire all the progress that had been made. Sitting there a feeling of relaxation and peace came over me, knowing that everything had been cleaned up, put away, and organized.

“Spring cleaning” isn’t just for your home life, though – the same process can be applied to your financial life as well. If you’re going to do some financial “spring cleaning” here are a handful of tips and different things to consider while you are cleaning up:

Dust off and update your Net Worth Statement: I update my Net Worth Statement once a year. It’s a good way to get a high-level snapshot of your entire financial picture in one place and to see how (and why) things have changed – not only over the past year, but over multiple years after you’ve been tracking it for a while. Having an idea of where your net worth stands is a great starting point for understanding if you’re on track to meet your financial goals.

Organize and review your short and long-term goals: Spending and lifestyle goals change over time, which is why it’s important to periodically check-in and review them. That way, you can figure out what you need to do financially (whether it’s saving more in a retirement account or paying down debt quicker) to achieve those goals. It’s OK if you don’t know the exact details of some of your goals, but having a rough idea of when you want to accomplish certain things and what you want your lifestyle to look like is important.

Refresh your budget: I love a good budgeting project. Knowing exactly what’s coming in the door (income), what’s going out (expenses), and what I’m saving each month is so helpful – especially since it helps me be intentional about where my dollars go. If you’re like me and you also love a good budget, consider using a personal finance app like Mint to track your finances and check-in every so often to ensure your spending matches what you’ve budgeted for. If you hate budgeting but still appreciate the positive impact and effects that budgeting offers, check out this alternative to budgeting article from our most recent newsletter.
Declutter your accounts: It’s hard enough keeping track of a daily (and seemingly never-ending) to-do list, let alone trying to keep up with and successfully manage multiple financial accounts across a handful of institutions. Take a look at that Net Worth Statement you updated and determine if any of the accounts you have can be consolidated to make things simpler. If you changed jobs in the last year, chances are you can rollover that dormant 401k you have from your previous employer into your IRA. If you’re not sure whether or not it makes sense to consolidate some of your accounts, Woodward Financial Advisors can help with that.

Organize your documents: do you have a drawer (or several) filled with “very important documents” you never look at? These could include things like insurance policy information, paystubs, tax forms, estate planning documents, etc. Spend some time going through these documents and figure out which documents you still need to keep and which you can safely shred or discard (like those insurance policy statements and bills from 10+ years ago…). If you’re short on physical space or want to clean that up as well, consider creating electronic copies of your important documents and storing them that way, too.

While most of us probably don’t love the act of cleaning and decluttering, we usually love the end result and that feeling of calmness afterward – the same can be said for financial “spring cleaning.” You may not love it in the moment (unless you’re like me…), but I promise the peace of mind that comes with having your financial life organized will be worth it!

Written by Roni Pflueger, CFP®

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