Refresh Your Finances This Spring

Written by JACOB W. BARR

As spring arrives once more, it’s time for spring cleaning, sprucing up the yard and gardens, working around the house, and the many other things that we do this time of year. One other thing we should be doing is looking over our finances and seeing what we can do to clean them up and refresh them as well.

A good place to start is to review your spending and see if it fits within your budget. Knowing where your money is going, and what it is being spent on is a very important piece of keeping your finances in order. Another thing to look at is the emergency reserves you have. If you don’t have emergency savings, know that you are not alone in that department – over half of Americans don’t have enough set aside to cover a $500 unexpected expense. One way to get an emergency reserve account started is to setup an automatic deposit from each paycheck, just like one would for a retirement account. This process builds up your emergency reserves automatically, without having to add one more thing to your list of “to-dos”. Having a solid budget and setting aside money for both retirement and emergency reserves is one of the best ways to reach your financial goals.

As we clean the house and throw things out, try working on throwing away your debt. Debt is like having all those things around the house taking up space that you don’t really need.

While you may not be able to pay down all your debt right away, assess the debt you have, and prioritize paying down higher-interest rate debt first, like consumer credit cards. Once you finish one area of debt, work on the next, and stay disciplined. Cleaning up your debt is a great way to move forward towards your financial goals.

If you started the new year with a raise at work, received an above-normal bonus, or if you’ve already gotten a tax return and it was a good one, most likely you have begun thinking about how to spend that extra money. And while it is good to enjoy life, before spending it on a new vehicle or a summer vacation, consider setting a portion aside for your retirement accounts. By doing so, you will be able to let that money work for you over years to come and have that much more in retirement years. And speaking of tax refunds, if you got a larger than normal refund, you may be withholding too much from your paycheck. Speak with your accountant to see if there are changes you can make.

Another thing to spruce up this spring is the estate plan. Check on beneficiaries to ensure that they are still accurate and how we would like them. Things change from year to year, and you may need to adjust things if life brought major changes, like getting married or having a child. Additionally, we ensure that other crucial parts of an estate plan are accurate, like power-of-attorney, a will, and a healthcare directive. It is also a good time to look at any insurance needs or changes. If you have people who depend on you for income, it’s wise to review your coverage and make sure that you have the right amount of insurance based on your specific needs and goals.

While you are doing all this financial cleaning, it might make sense for you to get the help of an expert. There are benefits to having a second opinion when it comes to your financial future, and it can be reassuring to hear that things are on track, or if they are not, what you can do to get them on track. Whether it is an accountant to help with tax concerns and issues, or a financial advisor to help with investment and retirement planning, a second look can be helpful. Especially during volatile times in the economy, a little reassurance can go a long way and help avoid making a decision that could have detrimental impacts down the road.

Everyone has a different idea of what they want their financial future to be, but we can all start working towards that future today.

Jacob W. Barr, AAMS, is a financial advisor at Raymond James Financial Services, 140 Paul Smith Blvd. in Hagerstown.