Spring cleaning can mean tidying up your wallet or pocketbook, as well as your closet.
In the spirit of renewal, here are 12 financial moves you should make this spring. Some are annual rituals, or should be. Others are tasks we tend to put off, but shouldn’t.
1. Revisit your resolutions
Many of us set New Year’s resolutions for 2024 around spending and saving, borrowing and earning, but fewer of us followed through on them.
“For a lot of people, a top money goal was paying off credit card debt or starting an emergency fund,” said Kimberly Palmer, a personal finance expert at NerdWallet. Spring is “the perfect time to see if you’re making any progress,” she said.
And what if you’ve made zero progress?
“For those of us who fell off track, there’s something called a reset button,” said Ashley Folkes, a certified financial planner in Birmingham, Alabama. “Spring offers the perfect opportunity to restart where we left off, without dwelling on regrets.”
2. Clean your financial ‘junk drawer’
Spring offers a chance to sort through that drawer – or box, or unused corner of the dining room table — where you stash financial paperwork to deal with on some unspecified future date.
“You know the one I’m talking about, where you toss all your statements and bills, intending to sort them out later,” Folkes said.
Working through the neglected papers is a great way to ease financial stress, he said. Throw some away. File some away. Deal with the rest, one way or another.
3. Start a 2024 tax folder
Speaking of papers: If you haven’t already, consider setting up a folder to stow all your tax documents for 2024: receipts, donation forms, and anything else you need to report or plan to deduct. Better still, set up one real folder, and another on your laptop, says Jeff Farrar, a certified financial planner in Shelton, Connecticut.
4. Watch that withholding
While you’re at it, look at your W-4 form and make sure you are withholding the right amount of your paycheck.
“Since taxes are on our mind, with April 15 coming, why not get better prepared for next year’s taxes?” Farrar said.
Will you get a refund next year, or will you owe? Most of us have a lot more control over that question than we think, said Jeff Jones, CEO of H&R Block. You may want to reap a large tax refund to help your family’s cash flow. You may prefer to limit your withholding so that you hold onto more of your paycheck until tax time. The decision is yours.
“In general, you can actually control the outcome,” he said. “We try to remind people, it’s really a choice you can make.”
Most of us have fairly predictable income. Take a look at your last few tax returns. Study the pattern. Are your earnings trending up, or down? Then, consult a tax professional.
Taxpayers straightforward returns “can be in much more control if they just get some expert help and think about withholding changes on their W-4 at the beginning of each year,” Jones said.
5. Talk to your tax preparer
More broadly, spring is a great time to have a conversation with the person who prepares your taxes.
“Aside from housing, taxes are most people’s largest annual expense, so it deserves more attention than pulling together your W-2 and 1099s” and sending them in, said David Flores Wilson, a certified financial planner in New York.
“Our advice is to have a thoughtful, proactive conversation with an accountant, CPA, or financial planner after the spring tax deadline so that you can strategize what you can do the rest of the year to lower your taxes prior to next spring,” he said. “Perhaps there are deductions or credits you weren’t aware of.”
6. Max out your retirement plan
You can contribute to an IRA up to April 15 and have the money count toward your 2023 savings. The contribution limit for 2023 is $6,500 if you’re under 50, $7,500 if you’re older.
Even better, get an early start on contributing to your IRA for 2024. The longer the money sits in your retirement account, the longer it can accrue interest.
