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March 2021: Financial Spring Cleaning — 5 Personal Finance Strategies to Implement Now

There are few things more exciting than the arrival of spring, especially after a long and grueling winter. Warmer temperatures prompt many people to get busy with spring cleaning projects both inside and outside their homes.

While you think about which spring cleaning projects you plan to undertake this year, you should also give some thought to financial spring cleaning. Here are 5 ways to clean up your personal finances this spring.

1. Reexamine your budget. If you haven’t looked at your household budget in a while, now would be a good time to do so. Over time, the numbers in your budget can change as your income and financial responsibilities and obligations shift.

For example, if one or more children has recently left home or graduated from college, this will likely lower your monthly expenses. On the flip side, if you have moved into a larger home, this will probably increase your monthly mortgage, utility and homeowner’s insurance costs. Your budget will also be affected if you’ve recently purchased a new vehicle or paid off a vehicle you financed. Of course, getting a raise at work or having your salary reduced is going to affect the income side of the ledger.

Once you have plugged all the new numbers into your budget, add up your total household monthly expenses and income to see if your budget remains in balance. If it does and you have excess cash flow at the end of the month, capture these savings by increasing monthly contributions to your retirement plan or setting the extra funds aside to meet some other financial goal, like making home renovations or taking an overseas vacation. However, if your expenses are now higher than your income, look for areas where you can cut costs to bring your budget back into balance.

2. Pay down high-interest debt. Consumer debt — especially high-interest debt like credit cards — is a major financial obstacle that keeps many families and individuals from achieving their goals. If you are carrying any credit card balances, make it your goal to pay these off as quickly as you can.

While it might seem logical to pay off the largest credit card balances first, some experts recommend the opposite strategy: Paying off smaller credit card balances first. Doing so may help give you a sense of accomplishment and additional motivation as you cross these cards off your list.

Once you’ve paid off credit card debt, be careful that you don’t fall back into debt again. Start by paying your balances in full every month instead of just making the minimum payment — this way you’ll avoid paying interest charges. If the temptation to use your credit cards is too great, then get rid of them and use a debit card or cash instead.

3. Check out your credit report. Your credit score will impact many areas of your financial life, including the interest rate you pay on consumer credit, so it’s important to keep a close eye on your score. It’s easy to monitor your credit by ordering a free copy of your credit report from each of the three major credit reporting bureaus (Experian, Equifax and TransUnion) at

To monitor your credit as closely as possible, you can order a free credit report from each reporting bureau every four months. Once you receive your credit reports, review them carefully for possible errors or omissions. If you spot any mistakes, contact the credit bureau to have them fixed.

4. Start (or contribute to) an emergency savings fund. Fewer than four out of 10 Americans (39%) say they can afford to pay cash for an unexpected $1,000 expense like a car repair or busted water heater, according to a survey recently conducted by These individuals often turn to credit cards, which can lead them into debt and result in thousands of dollars in interest charges over the long term (see #2 above).

A better solution is to build an emergency savings fund you can tap to pay for unexpected expenses. Keep the money parked in a liquid savings or money market account so you can easily access funds when you need them. One common benchmark is to save between three and four months’ worth of living expenses, though the exact amount will vary from one individual or family to the next.

5. Make an additional contribution to your IRA. It’s not too late to make a contribution to your IRA or SEP-IRA for tax year 2020. This year, you have until April 15 (plus extensions) to make an IRA contribution and allocate it to 2020. Doing so could garner an additional deduction if you haven’t filed your tax return yet, which could lower your 2020 tax bill.

You can contribute up to $6,000 to your IRA (combined traditional and Roth IRAs) for tax year 2020, or $7,000 if you’re 50 years of age or over. The SEP-IRA contribution limit is much higher: $57,000 or 25% of annual compensation.



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