You know the urge you get to throw your windows wide open and let the sweet-smelling, gentle spring breezes freshen the air and clear out a winter's worth of stuff, dust, and dirt as soon as the weather gets warmer? That's a deep cleaning.
Deep cleaning involves digging into all the dark, out-of-sight nooks and crannies that slowly but surely accumulate dirt, grime, and other interesting bits of debris—and getting rid of all that gunk and junk.
People usually deep clean their homes a couple of times a year. It's a good thing to do with your finances, too. And some of the same ideas involved in deep cleaning your home also can be used to spring clean your financial house.
Here are eight tips to make this deep cleaning as effective and efficient as possible.
Two Birds, One Stone
While cleaning out your old stuff can be daunting, it can help you clear your mind and space. Most of us accumulate much more than we need, leading to clutter and disorganization, not to mention unnecessary expenses.
Start by going through every room, closet, and storage space in your home. Take a fine-toothed comb and assess each item. It may be time to get rid of things you haven't used or needed in a while. Consider selling them or giving them away. This will help you recoup some cash while freeing you from maintaining and organizing them in the future.
For items that you can't sell, consider donating them to a charitable organization. Many organizations will accept clothes, furniture, and old electronics. Keeping your donation receipts can also help you claim a tax deduction for charitable giving. Remember to itemize these deductions when it comes time to file your taxes.
If you can't sell something you no longer need, or give it away, throw it in the trash and be done with it. It's served its purpose.
Clean Up Your Paperwork and Files
I used to have big, bulky filing cabinets for all my paperwork. It became overwhelming, so I modernized and went digital as soon as possible.
I back up my files with two systems: an automated cloud backup service that uploads my files for secure off-site storage and an external hard drive I keep at my office.
If my laptop stops working after I spill coffee on it — which I've done — I won't lose any critical documents.
If you have original documents you can't part with, put them in a portable, fireproof safe. Keep these to a minimum. Most things can and should be warehoused digitally.
Ensure you shred all financial or personal documents when you discard them to avoid identity theft. Personal paper shredders are inexpensive and do a great job safeguarding your information.
Your 2023 Financial Goals
Check-in on your 2023 financial goals. Do you have as much cash in your emergency fund as planned? Are you carrying credit card balances and paying high-interest rates? Are you putting as much toward your tax-advantaged retirement accounts as you'd like?
Your financial spring cleaning offers a perfect opportunity to check your progress. You can tweak and adjust your spending, savings, and investments as needed to hit your 2023 targets by the end of this year.
Cancel Unused Subscriptions
You can easily be spending $100+ per month on cable TV. Or, you could spend $10 on a video streaming service like Hulu, Disney+, or Netflix. And then there are less apparent subscriptions that cost people hundreds of dollars every single month.
Here's a quick exercise to get back on track.
List every single subscription you pay for, whether monthly or annually — video and music streaming, gym memberships, box subscriptions, landlines, antivirus software, hard drive backup services, etc. -- anything with a recurring charge attached to it.
After you have a list of your subscriptions, ask yourself these questions: Do I use this subscription multiple times a week, and does it make my life noticeably better?
If the answer is yes, good. Keep it. If the answer is no, cancel it and put that money to better use.
Prioritizing and Allocating Where Your Money Goes
Most people hate the "B" word: budgeting. It instantly conjures thoughts of sacrifice and giving up all the comforts they enjoy. While that's one way of looking at it, budgeting is a tool that can help you design and live a life you love before and during retirement.
Reframe how you look at budgeting. Instead of thinking about sacrifice, prioritize and intentionally design your budget to support your life based on what's most important to you.
Would you rather spend $100 per month on cable TV or set that money aside for a bucket-list vacation or your new retirement home? The same goes for spending money on new clothes, gadgets, eating out, or any other discretionary expense. While those things might be nice to have right now, how well will they serve your long-term needs and goals?
No one forgets to budget for their rent or mortgage payments. Yet most people don't budget for wedding, birthday, and holiday gifts. They don't budget for emergencies -- the furnace goes out during the coldest week of the year, the air-conditioning stops working on the hottest day of the year, the car just got a flat tire, the washing machine started leaking all over the basement, an unexpected family trip out of town to visit an aging relative, you get the idea.
Just because these expenses don't pop up every month doesn't mean they don't cost you money and take a (big) bite out of your budget. Set aside money in a high-yield savings account that's earmarked for "unexpected" expenses. You'll thank me later.
Review Your Insurance Policies
Your health insurance and life insurance requirements evolve as you get older. Someone with a spouse and children likely needs more life insurance than an unmarried person living alone. Are you getting the best rates possible for your auto and property insurance?
Your needs can change depending on your current circumstances. Rates frequently change. It's important to review your policies to make sure you have enough protection and how much you're paying for it.
Rebalance Your Portfolio
Your ideal asset allocation changes over time. As you get closer to retirement, you should start easing away from stocks to avoid sequence of returns risk.
Your asset allocation drifts over time as certain investments in your portfolio outperform others. You need to periodically review your portfolio, even when you don't plan to change your target asset allocation, so you can rebalance your portfolio to return to your target.
Rebalancing helps keep your asset allocation appropriate for your age, goals, and risk tolerance.
Review Your Credit Report for Errors
Credit bureaus make mistakes all the time. According to the Consumer Financial Protection Bureau, one in five Americans has an error on their credit report.
You can check your credit report for free once a year from each of the three main credit bureaus.
Your financial deep cleaning is a great time to thoroughly review your report and correct any errors. You can follow the simple process of disputing credit report errors if you find any. It's free and requires little effort on your part.
Team Up With a Trusted Professional
At Rich Life Advisors, we specialize in helping people just like you get retirement ready. Our advisors are knowledgeable, experienced, and dedicated to helping you understand the process and make the best decisions for your retirement.
To get started today, call (770) 249-7424, email Info@RichLifeAdvisors.com, or schedule an appointment today.
Beau Henderson is founder and visionary of RichLife Advisors, a locally owned and operated firm of retirement planning experts that focus on helping those approaching retirement create a comprehensive strategy to "live their definition of a RichLife." Beau uses a holistic approach to financial planning, with the goal of improving his clients' relationship with money while they live their unique definition of a fulfilled, meaningful retirement with purpose. He creates strategies his clients can understand, which provide financial comfort and confidence. Ongoing education and training is a top priority, and Beau strives to educate clients and make an impact as their trusted partner.
Beau has a psychology degree from the University of Georgia as well as the designations of Retirement Income Certified Professional (RICP®), Certification for Long-Term Care (CLTC®), National Social Security Advisor Certificate Holder, Certified Financial Fiduciary® , Certified Professional Retirement Coach (CPRC), Certified Bucket Plan Advisor, Master Certified Success Coach, and Certified Master Behavioral Analyst. He is also an active member of Ed Slott's Elite IRA Advisor Group℠ (an organization dedicated to the ongoing education and mastery of the latest retirement tax laws) and a best-selling author. In his free time, Beau enjoys podcasting, traveling, boating, fishing, and spending time with his daughter, Gwendolyn. To learn more about Beau, connect with him on LinkedIn.