4 Financial Mistakes to Avoid this Spring
Spring isn’t just about budding plants, changing the clocks, or paying your tax bill.
It can be the perfect time to refresh financial tasks and dust off your long-term goals.
As we begin a new season of financial “spring cleaning,” here are 4 (commonly made) mistakes you can prevent this year:
Mistake #1: Budgeting for 2023––Not 2024
A great first step to revitalizing your budget is a moment of reflection on this year’s goals.
Think vacations, purchases, new subscriptions––has your vision changed since 2023?
What do you envision for yourself this year?
And even if you’re certain your spending will be the same as it was in 2023, try not to hit “repeat.”
In doing some simple fine-tuning of your budget, you may identify some fresh opportunities and a renewed motivation to stick to your plan.
Tip: Take your budget review line item, by line item. It can be helpful to use the 50/30/20 method as a general rule of thumb, refining it from there. That would mean 50% of your budget is for your needs; 30% is for your wants; and the last 20% would be for savings and/or debt.1
Mistake #2: Automatically Renewing Insurance
Renewing your insurance every year doesn't guarantee the same coverage.
You also don’t need identical coverage for your vehicles, your home, your health, and other insurable items.
Take a look at your insurance coverage and your premiums before renewing in 2024. Check out the terms of your policies and ask your insurance provider about any changes from last year.
Tip: Take a look at what you can bundle and/or what incentives other insurance companies offer. If you’ve been loyal to a particular company and your premiums have gone up (yet again), now could be a great time to explore some new quotes and consider any “new customer” discounts you may qualify for.
Mistake #3: Losing Sight of Your Savings
What are your biggest financial regrets?
Most of us say not saving enough for retirement or a rainy day tops the list.2
Revisiting your saving strategies and habits yearly (if not more) can help ease the stress if and when those “rainy days” occur.
This year, consider a deeper dive into your accounts, whether that means earmarking more for savings, leaving some bad habits behind, or boosting your financial knowledge.
Tip: Set up automatic bank transfers to deposit a set amount into your savings account every week or month. You can also use apps to track your savings, find discounts, and deposit the change from your purchases into your savings account. Going the automated route can help you stay the course.
Mistake #4: Closing Too Many Credit Accounts at Once
You don’t want to keep old credit cards lying around—but you also be mindful about how and when you shut down your existing lines of credit.
If you clean house too fast, you could hurt your credit score.
Consider why you want to close existing credit accounts before shutting them down. If it’s high fees or an available bonus with a new card, explore all your options with your current card before taking action.
Also, try to avoid carelessly opening new lines of credit. First, review the terms, annual fees, and if/how the account will fit your needs.
Tip: Review a copy of your credit report before you make any moves with your existing accounts. Also, consider scheduling alerts with your existing credit accounts so it’s easier to monitor them and stay on top of any suspicious activity.
An Easier Way to Declutter Your Finances
Our financial lives involve a lot of moving parts that don’t necessarily keep up with our shifting plans. No matter your current financial goals, some routine “spring cleaning" can help you make smarter decisions when it’s time for those annual renewals, yearly bills from Uncle Sam, and more. So can a financial professional.
This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2024 Advisor Websites.
