Giving Your Finances a Spring Cleaning

The weather is warm, and the sun is out, so naturally, it’s a great time to shine a light on some of the aspects of your finances that might have been shoved into the closet for safekeeping. It’s important to remember that a financial plan is never “set-it-and-forget-it.” While it’s a great idea to establish a plan that’s built to last for the long-term, you should always revisit and update your plan to make sure it’s capable of directing you toward your goals. Here are a few options to consider as you make your way through the year.

1. Consolidate Your Finances

Keeping all of your accounts, investments and products in one place can help you manage and take inventory of your personal finances, giving you complete awareness of everything you have and its performance over time. This type of organization is vital, allowing you to keep tabs on your unique situation and its various layers. Furthermore, choosing one place to keep your accounts can help you attain certainty in fees and interest rates, potentially even allowing you to find the most advantageous rates for fees and interest for all your assets as opposed to a select few.

2. Review Your Budget

There’s never a bad time to take a look at your budget and update as needed, especially as life events occur over the course of the year. Maybe you received a raise or a promotion. In unfortunate circumstances, maybe your living costs have increased, and your paycheck might have less buying power. Reassessing your budget can be helpful or even necessary. You should also be sure that every one of your expenses is being accounted for, no matter the size. So often, small expenses can add up to become large, and they are so easy to brush off as necessary yet irrelevant. Keeping track of everything you purchase is the best way to know where your money is going and how to properly allocate it to maximize its potential.

3. Pay Off Debt [1]

Sometimes the best way to clean is to purge what you don’t need, so getting rid of your debt can tidy up your financial situation and lift a massive weight off your shoulders. In all likelihood, if you’re included in the 80% of Americans in debt, it could be preventing you from achieving your short and long-term goals. That’s why paying it off swiftly or with extra funds can be extremely helpful. We’d always recommend starting with bills that carry the highest interest rates. For example, paying off your credit card at 23% APR may be more advantageous than paying off your car loan at 6%. Debt management is key to preventing yourself from falling deeper into the hole, and a plan to pay it off can be the difference between financial freedom and financial constraint.

4. Use Your Tax Refund Wisely

Now that tax season has come and gone, you might be receiving a tax refund from funds you overcontributed to the government. While so many people look at their tax refunds as free spending money, using it to help you achieve greater financial goals can pay dividends in the long run. Remember, your tax refund is not free “just-for-fun” money. It’s money you earned that belongs to you and should figure into your budget and your financial plan. Some options you have with your tax refund include paying off debt, building an emergency fund, and saving or investing. And of course, the proper financial plan should leave room for self-care, so treating yourself with a portion of your return can be good for your brain and your body.

5. Consider Saving More [2]

While miscellaneous purchases can be exciting, contributing to savings or other types of investment vehicles can be a fantastic way to work toward and chip away at long-term goals. After closely examining your budget, you may be able to find places where you can make cuts, or fortuitous new circumstances may allow you to stash some of your money away. Maybe that means maxing out your traditional or Roth IRA account, for which contributions cap at $6,500 or $7,500 for those age 50 and older in 2023. It could also mean increasing your contributions to your employer-sponsored plan, or even building other savings or investing accounts. Your future self with thank you as you work to carve out the lifestyle you desire in the long term.

If you have any questions about the day-to-day management of your finances, please give Roth IUL a call! You can reach us at (800) 202-7398.


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