Time to Spring Clean Your Finances
Spring is almost here. So if you engage in an annual spring cleaning ritual, make sure you take the time to get your financial house in order, too. Here are six things you should do to tidy up your finances.
SEE ALSO: Tax Tips for Your 2012 Return
Clear out your flexible spending account. By clear out I mean use whatever 2012 money is left if your employer gives you until March 15 to use last year's funds. If there's any money left over in your account after that deadline, you'll lose it. See Last-Minute Ideas to Beat the Flexible Spending Account Deadline for tips to help you use your FSA funds.
Eliminate overwithholding of income tax. If you received a hefty tax refund -- the average check last year was about $3,000 -- consider adjusting your tax withholding so that you get the money when you earn it. Sure, it feels great to get a big check you can use to pay down debt, fund a vacation or add to a retirement account. But it means you’re handing over too much money to Uncle Sam – money you could use each month to pay bills, buy groceries, invest in stocks or whatever. Use our Tax Withholding Calculator to see how much you can add to your paycheck by adjusting your withholding.
Ditch unnecessary tax documents. After you complete your tax return, take some time to clean out your files. See Which Tax Records to Keep and Which to Toss for specific guidance. In general, hold on to all of your tax documentation at least three years beyond the filing due date. To reduce piles of paperwork even further, consider creating a digital archive of your tax records.
Freshen up your insurance coverage. While you're digging through old documents, pull out your insurance policies to review your coverage. See 10 Reasons Your Insurance May Need a Checkup to find out whether you need to update your policies.
Tidy your credit report. If you haven't checked your credit history lately, find time to do it. A recent study by the Federal Trade Commission found that one in four consumers had errors on their credit reports that might affect their credit scores, and, in turn, hurt their ability to borrow money or get new credit. See Why You Should check Your Credit Reports Each Year and visit Annualcreditreport.com to get a free copy of your credit report from each of the three credit bureaus -- Equifax, Experian and TransUnion.
Unclutter your home. By cleaning out the closets, attic or basement in your house, you might be able to improve your financial situation. See Clear Your Clutter to Reap Financial Benefits to find out how you can put more cash in your pocket or take advantage of tax breaks by getting rid of things you don't need.
After you've made these moves, see our Spring Home Maintenance Checklist for 18 steps you should take to save money on energy bills this summer and ward off big-ticket repairs.