How to spring clean your finances

Finances in need of revamping? Spring is an excellent time to make any tweaks your budget needs.

Larry Steagall /Kitsap Sun via AP/File
Bremerton Parks and Recreation worker Rob Flaherty washes away the dirt on the Lions Park tennis courts, in Bremerton, Wash. (Feb. 16, 2016).

Warmer temperatures make it a good time to thaw out and soak up some much-needed vitamin D. Why not use the subsequent energy boost to tidy up your personal finances? Performing some financial spring cleaning can help you avoid making a mess of your fiscal affairs down the road. Here’s where to get started.

Revamp your budget

Living within your means is an integral part of a healthy financial lifestyle. But we’re all human, and those new kicks you spotted at the mall or that popular restaurant down the street can make it difficult to stay faithful to your budget.

“Everything in your financial life flows from your ability to effectively manage and allocate your income,” says Carrie Houchins-Witt, a financial advisor in Coralville, Iowa.

She recommends that you review last year’s spending transgressions. Then recalibrate your budget for this year.  That may mean zeroing in on and consequently reducing purchases in a given spending category, such as going out to eat.

Tweak your investments

As important as it is to track current spending habits, make sure also to review the investment allocations in your retirement account and other long-term savings. This spring, adjust the mix if what you hold no longer gels with your overarching financial goals.

“We are all so busy and — especially for the index-fund investor who relies on the simplicity of this kind of strategy — it’s easy to forget that we need to perform periodic maintenance to ensure our investment allocations have not grown out of whack over the last year,” Houchins-Witt says.

Financial advisor Mathew Dahlberg recommends rebalancing your portfolio.

“Regularly rebalancing a portfolio can add a few percentage points to long-term returns,” says Dahlberg, of Kansas City, Missouri. He recommends using rebalancing tools offered by major online brokerages or just crunching the numbers yourself.

Ramp up retirement contributions

Boost your retirement savings this spring by setting up a monthly transfer from your checking account into a retirement fund. Contributing to a traditional individual retirement arrangement, or IRA, before the tax filing deadline may reduce your previous year’s taxable income. But consider making regular contributions throughout the year — it can take some of the guesswork out of investing the money.

Such dollar-cost averaging — or contributing in smaller, regular amounts to minimize risk — “forces you to buy at all price points and, therefore, takes the guesswork out of trying to find the right time” to get in the market, says Johanna Fox Turner, a financial advisor in Mayfield, Kentucky. “This also gives your money more time to grow than the lump-sum deposit on April 15.”

Adjust your withholding

Receiving a big tax refund isn’t necessarily a good thing. The average federal refund of about $3,000 could, if eliminated, put $250 a month in a taxpayer’s savings account. If you received or are expecting a large check from the government in coming weeks, it may pay off to adjust your withholding on your W-4 form before next year’s tax season.

“While you might love getting a huge tax refund, you should consider the potential income you are losing by giving Uncle Sam that interest-free loan,” Houchins-Witt says. “If you decrease your withholding to the amount necessary to pay your tax bill, you won’t get a huge refund next year, but you’ll have immediate access to money that could be put toward your 401(k) or college savings accounts.”

Houchins-Witt recommends working with a tax preparer to help determine how to revise your withholding so you don’t have too little taken out of your paycheck for the rest of this year.

Still, many people appreciate the forced savings element of a bigger tax refund. If you’re one of them, have a plan for the refund money that gives you the greatest benefit in the long run. It’s not found money — it’s part of your paycheck and should be treated as such.

The takeaway

Be it tweaking your budget or adjusting your withholding amount, there are plenty of ways to get organized this spring. No matter how minor a certain tuneup item may seem – like cutting back on movies or brewing your own coffee – you’ll be doing yourself a favor by putting the savings toward your future.

Tony Armstrong is a staff writer covering personal finance for NerdWallet. Follow him on Twitter @tonystrongarm and on Google+. This article first appeared in NerdWallet.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to

QR Code to How to spring clean your finances
Read this article in
QR Code to Subscription page
Start your subscription today