5 Tips for Financial Spring Cleaning

1. Review Your Budget and Cash Flow

When was the last time you stopped to evaluate your budget? If it's been a while, there's a chance you're overspending (or even underspending) in certain areas. For example, have your utilities crept up over the years? Are you paying down debt as aggressively as you could?

You can use a good, old-fashioned spreadsheet to get a handle on where your money is going. Take a look at how much of your income goes toward major budget categories. If your overall budget regularly ends up in the red at the end of the month, it might be time to make some spending cuts to get back to cash flow positive.

2. Clean Up Your Spending

Even if you're doing well in terms of staying in budget and meeting your goals, there's always room for improvement. You might be surprised how often you spend money when you don't really need to.

Now is a good time to evaluate whether to make impulsive purchases on food delivery services or online shopping, which might occur too often. While you should definitely spend money on the fun stuff every now and then, keep in mind that the average American spends $1,497 a month1 or roughly $18,000 a year on non-essentials, such as eating out, ridesharing, impulse purchases and personal grooming (pretty much anything that isn't a direct living expenses like rent, groceries and utilities). That's a lot of money that could be put to better use!

3. Reduce Financial Fees

Once you've taken a high-level look at your finances, it's time to go back with a fine-toothed comb and find those sneaky recurring expenses that you didn't realize were occurring. One place this can happen is with financial fees.

Start by pulling up your bank account and credit card statements and check for any one-time, monthly and/or annual fees that could be eating away at your hard-earned cash.

Credit Card Fees

Are you being charged an annual fee on your credit card? If so, is the fee worth whatever perks that credit card is giving you? Or could you close that credit card and switch to one with no annual fee?

If you're planning to apply for a mortgage or car loan in the near future, be sure to wait to close the fee-based and open any new accounts until after you get the loan. Activities like closing credit cards and applying for new credit can temporarily impact your credit score.

Credit Card Interest

Are you carrying a balance on one or more credit cards? If so, interest can be quite costly. Call every credit card company that you're carrying a balance with to see what rate they're currently charging you. Then ask if they can reduce it.

If you have multiple credit cards, call every single one (even if you have no balance with them) to see what their interest rate is and if they have any promotions for debt that you balance transfer to them. By asking for a lowering of interest rate and transferring balances to lower interest rate cards, you'll be able to reduce the cost of interest on your debt.

If you have significant credit card debt, consider consolidating it through a personal loan from your bank, which will typically offer you a lower interest.

4. Reduce Charges for Monthly Services

Consumers are spending more on apps than before. Many are subscription-based. Last year, consumers across the globe spent almost $156 billion on mobile apps alone2. All these apps that charge are easy to forget about as charges pile up. Review a year's worth of credit card and bank statements to identify all subscriptions and memberships you currently have. (Some only bill annually, so it's easy to miss those unless you review a year's worth of statements.) This is an important step because you may have memberships and subscriptions that you didn't even remember you had — or because you signed up for a free trial of something and then forgot to cancel it before you started getting billed. These are easy subscriptions to decide to cancel!

This is also a good time to reevaluate all your subscriptions and memberships and see if there are any you could live without. Do you need all of them? How about that gym membership you haven't used in six months? This is a great way to free up extra funds.

5. Make a Plan for Newfound Money

Once you've done a bit of financial tidying up, don't let your work go to waste. Decide how you'll apply that newfound money to saving, investing and paying off debt.

Retirement

If you aren't currently taking advantage of an employer-matching 401(k), find out how much of your salary will qualify for a match and consider upping your contribution to that amount. Many employers will match 50% of your 4o1(k) contribution, up to 6% of your annual salary.

And if you aren't maxing out your annual allowed contribution to an IRA, consider opening one (or boosting your annual contribution). A traditional IRA may afford you some income tax savings when you file your taxes. (Talk with your account for more info.)

Savings

When interest rates are high, consider opening up a high-yield savings account to help your savings grow. A money market account (MMA) can be a good choice if you want the ability to write a limited number of checks from the account each month. If you don't need to access the money right away, a certificate of deposit (CD) could be a great place to grow your balance.