Lesson #143-Spring cleaning with our finances
Personally, I don’t know about you, but spring cleaning is one of those things that I know I need to do every year and that I will be glad I did once it is over. But in the end I procrastinate doing it and usually don’t get around to doing it.
Truth be told we do similar things our finances. There are some small stuff that we know we should do each year, not major things. But in the end we don’t do them or push them off until when we’ll have “more time”.
Since it is that time of the year to do actual spring cleaning, I thought it would be fun to discuss four things that come to mind when I think about doing spring cleaning with our finances
Yes it can help our finances to do some actual, physical spring cleaning. I’m amazed at how demotivating clutter can be for us. Currently we have three children under six so I know how it happens. You clean up your house and like 10 minutes later it somehow looks worse than when you originally started. So instead you just put stuff into our “get to later pile” and we never get around to it.
But it is good to take a weekend every once in a while to put stuff away where it belongs or actually to get rid of the unwanted stuff. The benefits are we get to make some money. By selling or donating things off of Craigslist, having a garage sale, or donating toys or clothes to charities.
De-cluttering can also help us by stopping the need to spend money in the future. How much we spend each year on a storage unit or storage bins to use in our home? How much are we paying to store that 3rd car we hardly use or to storage the boat we take out once in a while?
It also helps our energy to give stuff to people who will use it a lot more than we will. In addition to helping our creative energy by simply eliminating the stuff in our lives.
Life insurance is never a fun topic to discuss. But now is as good of a time as ever to review your life insurance needs and current coverage and determine if you need to add or eliminate certain types of coverage.
When it comes to life insurance you need to remember why you need it in the first place. Life insurance is needed if someone depends on you financially. This often is a spouse or if you have children still at home. Also if you aren’t independently wealthy there is a good chance you need some kind of life insurance in place.
You don’t need life insurance as a way to invest for retirement or your children’s education. You also don’t it if you don’t have anyone who depends on your financially for their support. You also may not need it if you are independently wealthy.
As for how much coverage you need, well a good place to start is 10x your income. Some might need more or some might need less depending on your situation. But I would only recommend purchasing term life insurance, as hopefully there will be a point in your life where you get to a point when you won’t need life insurance any longer.
You know with it being April I had to sneak in a section about taxes. Are you getting a huge refund this year? Do you need to adjust your W-2? The W-2 is where you claim how many dependents you expect to claim on your taxes and that determines how much money is withheld from you paycheck each month. The more dependents you claim, the less $$ is withheld.
The thing is that you don’t need to match the real number of dependents you actually claim. For example we have five dependents in our home that we claim each year on taxes. I claim 20 on my employer paycheck . . . . and we still got a $800 refund for 2016’s taxes.
Now everyone’s situation is different and please consult a tax professional for specific advice in your situation. But I see so many people struggling to make their minimum payments each month but they are still getting a big refund each April. Instead have that amount come to you in your paycheck throughout the year so you can manage it better and not get in the predicament in the first place.
Investment are not a fun thing for us to do. But take a hour or two and look at what your investments are and how they are performing. You’ll also want to check your fees that you are paying on your investment to see if they aren’t too high relative to their performance.
You’ll also want to see if you are contributing enough. I recommend after you are debt free to work towards contributing 15% of your pay into investing for retirement. If you don’t like to do this stuff on your own or you feel that it is intimidating than I would recommend working with a professional to help teach you the basics and get you comfortable with investing.
Again these are four small things to do and there are other similar smaller things that you can do as well. They aren’t going to be earth shattering moves like starting an emergency fund or becoming debt free, but they will help your finances and you’ll be glad you did them once they are completed. I recommend just taking one of these a week and try to accomplish the task.
Today's quote of the lesson is brought to you by the JW's Financial Coaching Newsletter
“Clutter causes stress, and clutter is one of the main barriers of productivity” ~ Charisse Ward
Enjoyed this lesson? If so, please consider taking a few minutes to leave a review of the show either in Stitcher SmartRadio, or iTunes. For a step by step video of how that works, please watch this video on how to leave a review in iTunes.
You can subscribe to future podcasts through Stitcher SmartRadio or iTunes, Google Play or by downloading the iPhone app. Or you may listen to the podcast on the JW's Financial Coaching Facebook Fan page.
It is Free