Spring Cleaning For Finances: The Importance of an Annual Review

Updated on May 2, 2016

Loans, business concept, fountain pen.By Bernadette Tymitz, Vice President of First Financial Group USA, Inc.

Spring is here, finally! If you live in a Northern State like myself, the warm sun could not come soon enough. It makes you feel motivated to get things done. Deep cleaning your home, organizing closets and clearing out extra things that you do not use are all probably on your spring cleaning to-do list. The sense of accomplishment you will have when that spring cleaning task is complete can leave you feeling invigorated and ready for the fun summer days that are just around the corner. However, your spring cleaning should not feel complete until you have spring cleaned your finances. Spring is the perfect time to review and organize your financial profile. Here are four ideas to help you enjoy the warm weather with clean and decluttered finances:

  • Get organized. One of the most difficult tasks for loved ones is to locate information after a family tragedy.  Attempting to find important documents, passwords for accounts, keys to the lock boxes, where the accounts held, what bills need to be paid, etc., can be nearly impossible. Take the time to create an emergency file. Put in this file lists of investments, bank accounts, bills that need to be paid, passwords for accounts, and the location of all of your important documents, such as your trust. Include in your file a list of your financial advisors, your attorneys, your tax advisors, and any other professionals that you deal with that could offer your family guidance. Most importantly, do not forget to tell your trusted loved ones where this file is located and how it is labeled. Create a name that will be easy for them to remember, for example: In Case of an Emergency, Emergency Information, or simply, 911.

  • Remove your debt. Now that you have all of your obligations organized from step one, this next step should be easier. Look at your spending habits and credit card debt. This is the perfect time to start to pay off those credit cards. If possible, look at putting more towards paying off the credit cards, and spend less in other areas. If you have not called your cable/internet provider in over a year, it is time to renegotiate that bill. Do the same with your auto insurance and home owners insurance. This can save you money that can be reallocated toward your debt. Try to renegotiate any credit card or other debt high interest rates. Alternatively, investigate a balance transfer to a zero interest credit card. However, the trick to make this work, is to pay off the balance on time, in the zero interest months.
  • Reviewing your beneficiaries. Now that you’re off to a great start because you have your debt obligations under control, it’s time to think about your legacy. One of the biggest mistakes people make is not doing a beneficiary review every year. A lot can change in a year. One of the first questions I ask anyone who walks in my door is, “When was the last time you did a beneficiary review?” The most common answer I receive is, “I don’t know, but I am sure it all goes to my spouse.” Sometimes, they are correct, but often they are not. Typically, there is a life insurance policy that they forgot to change out of their parents’ or siblings’ names, or a bank account with no beneficiaries on it. If you have lost a spouse, or if you have been through a divorce, this must be a top priority. If you do not have a trust or if you have a trust and have not had it reviewed in a number of years, make an appointment with your attorney. This is a perfect time to have your trust updated and your beneficiaries reviewed. This one simple step will help you sleep at night.
  • Review your portfolio. Now is the time to have an annual review with your financial advisor to go over your portfolio. If you have not had a meeting with your financial advisor in a couple of years, schedule one. Take a look at your portfolio before your meeting and be prepared with questions. If you are holding on to poorly performing investments, discuss other options. If you have policies that are a few years old, pull out the statements and review how they are performing. If you are unsatisfied, discuss that with your advisor. As you become older, your investment strategies need to change because your needs change. You have worked your whole life for your retirement, now may be a good time to discuss wealth preservation with your advisor.

Spring is in full force and as you get to work on your spring cleaning list, be sure to include your finances so that you can enjoy the season with a bit of relief!



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