Spring cleaning is something many of us do around our homes, both inside and outside. This might entail cleaning our closets and donating old clothes we no longer wear to charity, or getting our yards looking sharp for outside activities as the weather improves. 

Spring cleaning your finances is also a good idea. Here are some thoughts on this process. 

Review Your Budget and Your Spending 

Spring is a good time to review your monthly budget and your spending. Are they in sync? Hopefully you revised your budget going into 2024; if not this is the time to do it. Review your spending for the first couple of months of 2024 and be sure everything is accounted for in your budget. 

If you find that you are overspending, this is the time to see how you can cut back if needed. Regardless, having a budget and sticking to it is critical to your financial success. If you have sloughed off a bit early in the year, this should be a top spring cleaning priority for you. Review and revise your budget if needed. Most of all, make a commitment to yourself and your family to stick to your budget for the rest of the year. 

Retirement Savings 

Are you contributing as much as possible to your 401(k) plan or other type of retirement that may be offered by your employer? If you are self-employed or have a side gig, have you established a retirement plan for the self-employed such as a solo 401(k), SEP-IRA or SIMPLE IRA? 

Beyond contributing to your retirement, it is important to be sure that your retirement savings are being invested in accordance with your overall investment strategy. You should have an asset allocation for your overall portfolio and for each retirement account. It is important to be sure that these accounts are properly allocated with the right mix of upside potential and downside risk protection. 

Another spring cleaning exercise related to your retirement savings is to ensure that if you have any plans connected with old employers that you stay on top of these accounts. It can make a lot of sense to roll this money over to an IRA or perhaps to your current employer’s plan. If it makes sense to leave the money with an old employer’s plan due to a superior investment lineup or some other reason, be sure you have a plan in place to keep monitoring this account. 

A Financial Plan 

Your monthly budget and retirement savings are part of a larger overall financial plan. This is a plan that takes a longer-term view of your financial situation. If you do not have a financial plan in place, this is the time to take that step. Consider engaging the services of a qualified financial advisor to help. You may have the skills to put your plan together, but a key part of the planning process can be the objective third party perspective that a financial advisor can provide. 

Investments 

Spring cleaning is a good time to review your asset allocation for investments across your portfolio. This includes both taxable accounts and retirement accounts. If you have a target asset allocation in place, be sure to rebalance your portfolio back to that target if you find that your allocation has strayed beyond an allowable amount. 

If you do not have a target asset allocation in place, this is the time to tackle this issue. If you are in the process of doing your financial plan, this should be a key element of that process. 

Estate Planning 

Do you have an estate plan in place? This can be as simple as having a will and ensuring that all beneficiary designations on retirement plan accounts as well as on any life insurance policies or other insurance products like an annuity are up to date. Did you experience any life changes during the past year such as getting married or divorced? Did your spouse die? Did you add a new child to the family via birth or adoption? All of these situations and others warrant a review of your estate planning situation. 

If your situation warrants, this might be the time to do more extensive planning. Perhaps you need a trust to effectively pass certain assets to children or others. 

Do you own a business? If so, do you have a succession plan in place to help facilitate your retirement? What happens to the business in the event of your death? These issues need to be addressed by all business owners. 

These are just some of the areas for spring cleaning your finances. Your Wedbush financial advisor can help with this process; please feel free to reach out to them for help.  

 

Disclosure  

Securities and Investment Advisory services offered through Wedbush Securities, Inc. Member NYSE / FINRA / SIPC.  

Wedbush Securities does not provide tax or legal advice. Please consult your tax or legal advisor.  

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.