Cleaning Up Your Finances

Getting your personal finances in order is a lot like spring cleaning: no one really enjoys it, but you have to get it done. If you haven't paid attention to your finances lately, this to-do list of steps may help you tidy things up a bit.

  1. Organize the paperwork. Find all your important records, documents, and financial statements and move that paperwork to a central location.
  2. Dust off your tax strategy. It's always helpful to review your taxes. You may want to get recommendations from a tax professional about ways to improve your tax picture for the current year.
  3. Set up a budget and stick to it. Make it a priority to deposit a set amount into a savings or investment account every month. Analyze your spending habits and plan ahead for major expenses.
  4. Spruce up your credit. Transfer credit card balances to lower-rate cards, or pay off your credit card debt and use the money you save on finance charges to begin a regular investment program. If mortgage rates are low, consider refinancing to save on interest payments or reduce your tax liability. Also, think about taking out a home equity line of credit that offers a low rate and tax-deductible interest.
  5. Think about a total overhaul. You may have reached a new stage of life that requires different investment tactics. Should you rebalance your investment portfolio? What about your life insurance coverage? Consult a qualified financial professional for specific advice that fits your situation before making any decisions.
  6. Plan for future needs. What is your retirement funding strategy? A 401(k) retirement plan can give you a reduction in current taxable income, an excellent savings plan, and tax-deferred earnings. Many employers also match 401(k) contributions, which further enhances the value of this retirement funding vehicle.
  7. Protect your home. Review your homeowners' insurance and car insurance policies carefully; there may be adjustments you can make to reduce your premiums without damaging your insurance position. Make a video recording of your home to document your possessions. Store the video in your safe deposit box and update it regularly.
Emochila: CPA Websites