Spring clean your finances for a fresh start

[UNITED STATES] Spring is a fantastic time to give your finances a "deep clean," much like you would clean out your home and garden.

"With the current volatility in the markets and uncertainty in the air, it is prudent to control what we can control," said Jody D'Agostini, a certified financial planner and senior partner at Falcon Financial Group in Morristown, New Jersey. She went on to say that "spring cleaning" your finances might "make you feel more secure and perhaps bring more order into your world."

Inflation and rising interest rates have added another layer of complexity to financial planning over the past year, making it even more critical to reassess spending, savings, and investment strategies. A recent survey by Bankrate found that 57% of Americans feel financially insecure due to economic pressures, underscoring the importance of taking proactive steps to stabilize one’s financial footing.

Here are some key considerations financial advisors recommend to dust away poor or outdated financial habits and bring a fresh perspective.

Organize financial documents

Organize your financial documents in a way that’s easy to access and understand in a filing cabinet or a digital folder. You can start by pulling together bank and credit card statements, investment account summaries, insurance policies, and your most recent tax returns.

In addition, create a “My Social Security” account on the Social Security Administration’s website to check your earnings records, get estimates of your monthly retirement benefits, and manage current benefits. Review your statement, download a copy, and contact the Social Security Administration if there are any mistakes.

Experts also recommend reviewing beneficiary designations on retirement accounts, life insurance policies, and wills to ensure they reflect your current wishes. Major life events—such as marriage, divorce, or the birth of a child—can make outdated designations a costly oversight. A 2023 study by WealthCounsel found that nearly 60% of Americans haven’t updated their estate plans in the past five years, potentially leaving assets vulnerable to unintended distribution.

Tidy up your budget

When it comes to organizing your funds, the adage "don't sweat the small stuff" isn't applicable. In fact, CFP Gerald Grant III advised you to do the opposite.

"People often think it's the big expenses that push them over budget," said Grant, vice president of the G Financial Group in Washington, D.C., which works in collaboration with Equitable Advisors. "Actually, it's the small everyday spending, such as 8 coffees in the morning, 18 lunches, and a $5 dessert." When you sum up those tiny expenses over time, they might add up to a significant amount."

To keep track of spending, some financial counselors propose putting tiny expenses on a single debit card — even a credit card if paid off every month. Then see what you can cut.

Budgeting apps like Mint, YNAB (You Need A Budget), or PocketGuard can help automate expense tracking and identify areas where small cuts can lead to significant savings. According to a NerdWallet report, users of such apps saved an average of $300 more per month compared to those who tracked spending manually, proving that technology can be a powerful ally in financial spring cleaning.

“An extra $200 or $300 a week can have a big impact, especially in times like these,” Grant said.

Take a look at reoccurring costs as well.

For example, automobile insurance and homes insurance plans sometimes renew automatically, especially if you've set up automatic payments or haven't taken any measures to cancel or amend your policy. However, if your premium has increased, your coverage requirements have changed, or you want to save money, you should check around to determine if it's worth switching.

Also, cancel any subscriptions you don’t use to free up cash.

Polish your investment portfolio

Research any stock, mutual fund, or exchange-traded fund that you own or decide to purchase.

“It’s worth noting that owning individual stocks involves a more concentrated risk than investing in exchange-traded funds or mutual funds, which combine stocks to help spread the risk,” said Lazetta Rainey Braxton, a CFP and founder and managing principal of virtual firm The Real Wealth Coterie.

Diversification remains a cornerstone of sound investing, particularly amid market fluctuations. A Vanguard analysis showed that portfolios with a balanced mix of stocks and bonds historically weathered downturns better than concentrated positions. Revisiting asset allocation—especially if you’ve experienced significant gains in tech stocks or other high-growth sectors—can help mitigate risk without sacrificing long-term returns.

As you assess your portfolio, ensure that your investment plan aligns with your financial goals and risk tolerance. If it doesn't, you should make some changes.

With the stock market showing big increases in 2023 and 2024, it may be time to rebalance your portfolio. If the stock market upheaval is making you concerned, you may require more bonds or cash for peace of mind.

Remember that a decrease in a major stock index does not equate to a percentage loss on your assets. "Look at your portfolio a little differently than you look at the news headlines about what happened to the S&P 500," said Brad Klontz, a CFP and psychologist who is the managing partner of YMW Advisors in Boulder, Colorado. "Chances are, that's not where all your money is."

If you're living paycheck to paycheck, think about ways to build up cash savings for emergencies.

"Get creative," advised Winnie Sun, co-founder and managing director of Sun Group Wealth Partners in Irvine, California. She suggested that you take on a side gig, such as delivering DoorDash, or sell appliances, furniture, or items you no longer need on eBay or Poshmark.

The gig economy continues to offer flexible opportunities to bolster income, with platforms like TaskRabbit, Rover, and Upwork reporting increased demand for freelance services. A 2024 Pew Research study found that 16% of Americans now rely on side hustles to cover essential expenses, highlighting how supplemental income can serve as a financial lifeline during uncertain times.

Sun recommended that, if you’re a homeowner, you should open a home equity line of credit at a bank or credit union if you qualify. “You want to have it in place as an emergency line in addition to your emergency fund,” she said. After all, having sufficient cash reserves brings peace of mind — and that’s priceless.