Spring Clean Your Finances With These Tips

As we look forward to the Superbowl and welcome spring, your home is not the only thing that deserves spring cleaning. Your finances can use it too! Simply follow these tips!

1. Get organized for tax filing

Although April is usually referred to as “tax-filing season,” the reality is that you’re going to start getting tax documents as early as January 31st. But even before you receive your W2s, 1099s, and other tax forms, you’ll want to collect all of the important supporting paperwork to which you already have access.

You want to have a record of your expenses. If you are a business owner or independent contractor, this is especially important. Consistent bookkeeping is key all year round, for your profits and expenses. Make a list of expenses that you have in your business and record it in a spreadsheet.

Here’s how to organize and keep financial documents secure.

How long should you keep your tax records?

You want to keep records of previous years’ tax returns for at least 3 years. 

According to the IRS,

1. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
2. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
3. Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

2. Set your budget for big plans this year.

Are you thinking of a big vacation or home improvement project like that bathroom remodel, big paint job or new fence?

For summer vacation plans, it’s good to book flights and accommodations 3 to 6 weeks early so you can nab the best prices.

Home improvement materials have increased in cost post-pandemic. You might find this article helpful in estimating the cost of your home improvement project. The exact amount will depend on the scope of the project, where you live, and other factors.

As of the original date of writing this blog, those receiving social security benefits will receive an 8.7% COLA (cost of living adjustment) in 2023, the largest raise for retired workers since 1982. Inflation has decelerated for five consecutive months, and that trend could restore some of the buying power Social Security benefits have lost.

3. If you are wondering if or when you can retire, don’t make the mistake of retiring EARLY without proper planning.

A Harvard economist warns retiring in your 50s is one of the worst money mistakes you can make. Many people underestimate healthcare costs and overly depend on our shaky Social Security system. Economists estimate the main fund that supports Social Security will run low by 2034. This means you could see less than 80% of the benefits you expected after 2034.

To see if you can retire comfortably, be sure to use these tools:

1. Calculate your life expectancy to determine how long you can expect to live and if your savings will last that long.
2. Watch this video: How Much You Should Have in Retirement Savings by Age
3. Calculate How Much You Need To Retire to know how much money you will need in retirement.
4. Schedule a free consultation meeting with a Retirement Income Certified Professional RICP® who will provide guidance and advise tailored specifically to you. Note: This is only available for US residents.

4. Review your coverage.

February is Insure Your LOVE Month. Think about who you love, are they protected? Do you have life insurance to help them if something happens to you?

If you already have life insurance, when was the last time you checked if it was enough? Did you have any life changes since the time you bought your policy?

Life changes like getting married, a newborn baby, a new home, a new business, divorce, loss of a partner, or retirement can affect your need for life insurance and it is recommended that you review your policy and update your coverage. I often say, “If it doesn’t have living benefits, it is not adequate!”

Check out some Q and A videos I’ve recorded recently that answer some pressing questions like Should I Cash Out My Investments Right Now and Should I Pay Off My Debt Before I Save for Retirement?

Book a consultation here

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Sheilla Vidal is a Retirement Income Certified Professional RICP® and life insurance broker. Sheilla is also a physical therapist, wife, mother of two, and one of the caregivers for her 85-year-old father. She is an avid learner.  She writes, speaks, and recognizes that her work in helping clients live with dignity is her God-given mission.