Hello, sellers! Sharing TrustPlus personal finance coach Elise Nussbaum's article, Spring Cleaning Your Finances. Elise is a Jeopardy champion and it turns out a great writer, too.
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Spring Cleaning Your Finances
By Elise Nussbaum, TrustPlus personal finance coach
Spring is nearly here, and with it, the annual urge to sweep out the dust bunnies from whatever furniture they’ve been nesting under, spelunk in the far corners of your fridge to extract desiccated condiments, and scrub your tub until it’s clean enough to eat maple walnut ice cream out of. But what about spring cleaning… your finances?
A few financial chores, like checking your credit online or adjusting your budget to reflect your income and expenses, are more like dusting or vacuuming: best done on a regular basis. But there are financial tweaks that are just as important to do on an annual basis.
Check your beneficiaries. No matter what your will says, money from 401k accounts and life insurance policies will pass to the person listed as the beneficiary on the paperwork. So if you have had a child, gotten married or divorced, or discovered that the long-lost twin brother you thought had perished in the Andes had actually faked his death as part of a revenge plot to help you regain control of your family’s company, you will want to make sure that these accounts pass to the appropriate people.
Contribute to an IRA for the previous tax year. If you haven’t yet filed your 2020 taxes, and you would like to reduce the bill (or increase your refund), look into contributing to a traditional (pre-tax) IRA for the previous year (which you can do this year up until the extended deadline of May 17). Making pre-tax contributions can also lower your student loan payment (if you are on an income-based repayment plan) or increase your health insurance subsidy (if you are on a plan from the healthcare exchange). If you would rather pay taxes now, and not in retirement, a Roth (post-tax) IRA might be a better option for you. A TrustPlus financial coach can help you weigh pre-tax and post-tax options.
Adjust your tax withholding for the current year. If you have already filed your taxes and you are unhappy with the result, you can start planning now to avoid any nasty surprises for next year. If you are a W2 employee, you can update your W4 form to adjust your withholding, which will hold aside a little bit of money from each paycheck to decrease the amount you owe at the end of the year. If you are a freelancer or a gig economy worker, you will have to do this on your own: open a dedicated savings account and put a percentage of each check into that savings account. When you are figuring out what exactly that percentage should be, a TrustPlus financial coach can help you run the numbers to decide what will be the most helpful — and realistic — number to shoot for.
Review your fixed expenses and subscriptions. Modern life makes it easy — sometimes too easy — to accumulate monthly charges that long outlast their usefulness. Spring is an excellent time to sit down with your credit card bill and your bank statement, and mark out what expenses you might be able to adjust. Now that Bridgerton is over, is Netflix still worth what you’re paying for it? The same goes for expenses like insurance: you can’t do it without it, but you can shop around and make sure you are still getting the best deal.
Schedule a check-in with a TrustPlus financial coach. Spring cleaning your personal finances can sometimes raise more questions than it answers. A TrustPlus coach can help you talk through your larger goals and understand how your current actions fit into that larger picture, as well as help you avoid any pitfalls along the way.
