Spring is a time for a change. But that applies to more than just swapping out your winter wardrobe. Leaving 2020, its challenges, and the cold all behind you is one thing, but your finances need to be addressed, too. Maybe it’s been some time since you reviewed your budget, or you’ve struggled to organize your financial documents. If so, it might be time to consider some new practices while avoiding others. With that in mind, here are a few things you should try to avoid when spring cleaning your finances this year.

Setting Idealistic Goals

The first step you should take is to review your financial goals for the 2021 year and decide what is realistic. Everyone has dreams, and it is essential to have them. They can motivate you to work harder; however, they also have the potential to hurt you.

While it’s okay to want an expensive gift, like a TV or a vacation, it might not be the best time. You have to discern what you can put on the back burner for now and prioritize the more necessary goals at the moment. Take the time to sit down and write out your goals to have them in front of you. Then work through what you can manage to achieve this year and what you cannot. Doing the process manually will make it easier to work through them and help you accept the decisions you’ve made.

Overlooking Financial Tools, Resources, and Services

If you grew up watching their parents do all the budgeting, planning, and organizing their finances, you may have seen them at the kitchen table, their head in their hand, and papers scattered about everywhere. While they might have had to do everything on their own, that doesn’t mean you have to.

There are countless resources at your disposal that would make the entire process this spring much more manageable. For example, you have your choice of apps that could help you budget. Alternatively, if you’re still a little concerned about using technology, you can pursue financial help like seeking a financial planner’s services. It may take some time to figure out what tools are the most helpful. So, carve out a day or two ahead of time to explore your options.

Forgoing Putting Your Budget On Paper

When spring cleaning your finances, you may take sometime to focus on your budget. Just like writing down your financial goals, you should do the same for your budget. It’s easy to decide on a number and keep it in your head, but there’s nothing to hold you to. That doesn’t just apply to going over budget. Some individuals restrict themselves too much as well. Neither extreme is beneficial to your financial health.

You’re allowed to enjoy yourself this spring without getting excessive. If you have a spouse, this might be an excellent suggestion to work on together. You can sit down with some coffee and make a date out of it. Talk about what budgeting system works for your household so that you both can stay on the same page. Once you decide on the right system for the both of you, write it down. Writing it down will make it easier when it comes time to review your budget. 

Lacking Accountability

Accountability is one of the most crucial habits you need when dealing with your finances. Try to be conscious of your behavior. If you’re spending too much, don’t just shrug it off. Stay on top of yourself and try to pick up good spending habits.

The sooner you adopt this forward-thinking attitude, the easier it’ll be to avoid any missteps along your financial journey. Once again, this might be a great one to work on with your partner. Communicating and holding each other responsible can go a long way to addressing some lax financial behaviors.

Setting it and Forgetting it

Dealing with finances is often stressful. No one blames you if you need to take a step away while working on them. But, you can’t just organize your finances and then hope that everything works out independently. You have to review your finances regularly.

Reviewing your finances includes looking at all elements of your finances like your insurance policies, budgets, investments, and any other ongoing financial decision that may impact your future. Keeping tabs on your finances will help you assess your progress and make adjustments when necessary.

Pitching Financial Documents Too Soon

While you spring cleaning your finances, you may feel inclined to get rid of all old documents. But, pitching important documents too soon can result in some sticky situations.

Did you know that there are personal documents you should keep even after they’re no longer active? While you can throw out some documents after they expire, such as sales receipts, there are others you should hold on to forever. The period depends on the document itself.

So, before you bring out the trash can or pull up the recycle bin, research which documents you should keep and for how long. It would be best to note it somewhere safe. Some can also require a secure location, like a safety deposit box, such as a will or a death certificate. Make sure you have a space on hand for them.

Canceling Credit Cards

While some may think that cancelling your credit card is a good way to deal with debt, it’s a little more complicated than that. Canceling a credit card can also impact your credit score. Your credit score is created from your average length of history. Once you kill that card, you cut into the time it’s open. Also, your credit utilization rate could shift. Your credit utilization rate is the amount of credit you use versus the amount of credit you have available. If you close one card, you lower the amount of credit available. Both of these ratio changes could hurt your credit score in the end.

That’s not to say you can’t ever close a credit card. You can talk to your bank or issuer about what options you have. They may allow you to switch to another card with different fees or move your balance to one with a lower rate.

Cleaning Up the Act

Spring is prime time for new opportunities and to improve your world. Changing your financial habits or sharpening your know-how can set you up for both. It may pose its challenges, though. So, if you plan to organize your finances this spring, try to avoid these things when spring cleaning your finances.

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