How to spring clean your finances

A version of this article first appeared in CNBC’s “Money 101 newsletter with Sharon Epperson,” an eight-part series to help you achieve financial freedom, with special monthly editions to continue to improve your financial well-being. Sign up here to receive the newsletters straight to your inbox.

Spring is a great time to refresh your finances with a “deep clean,” just as you may clean out your home and garden this time of year.

“With the current volatility in the markets and the uncertainty in the air, it is prudent to control what we can control,” said Jody D’Agostini, a certified financial planner and senior partner with the Falcon Financial Group in Morristown, New Jersey. 

Doing some “spring cleaning” for your finances, she added, can “make you feel more secure and perhaps bring more order into your world.”

Here are some key considerations financial advisors recommend to dust away poor or outdated financial habits and bring a fresh perspective. 

Organize your financial documents in a way that’s easy to access and understand in a filing cabinet or a digital folder. You can start by pulling together bank and credit card statements, investment account summaries, insurance policies and your most recent tax returns.

In addition, create a “My Social Security” account on the Social Security Administration’s website to check your earnings records, get estimates of your monthly retirement benefits and manage current benefits. Review your statement, download a copy and contact the Social Security Administration if there are any mistakes. 

“Don’t sweat the small stuff” isn’t a maxim that works when it comes to cleaning up your finances. In fact, CFP Gerald Grant III said you should do the opposite.

“People often think it’s the big expenses that push them over budget,” said Grant, who is vice president of the G Financial Group in Washington, D.C., working in alliance with Equitable Advisors. “Actually, it’s the small everyday spending, the $8 coffee in the morning, $18 lunch with a $5 dessert. When you add those small expenses up over an extended period, they can become a big total.”

Some financial advisors recommend putting small expenses on one debit card — or a credit card if you pay it off every month — to keep track of spending. Then, see what you can cut.

“An extra $200 or $300 a week can have a big impact, especially in times like these,” Grant said.

Take a look at recurring charges, too.

For example, car insurance and homeowners insurance policies often renew automatically, especially if you’ve set up automatic payments or haven’t taken steps to cancel or change your policy. However, if your rate has gone up, your coverage needs have changed or you’re looking for savings, you should comparison shop to see if it’s worth switching.

Also, cancel any subscriptions you don’t use to free up cash.

Research any stock, mutual fund or exchange-traded fund that you own or decide to purchase.

“It’s worth noting that owning individual stocks involves a more concentrated risk than investing in exchange-traded funds or mutual funds, which combine stocks to help spread the risk,” said Lazetta Rainey Braxton, a CFP and founder and managing principal of virtual firm The Real Wealth Coterie. She is also a member of the CNBC Advisor Council.

As you review your portfolio, make sure your investment strategy stays in sync with your financial objectives and tolerance for risk. If it doesn’t, you need to make some adjustments.

With strong gains from the stock market in 2023 and 2024, it may be time to rebalance your portfolio. For peace of mind, you may need more bonds or cash because the turmoil in the stock market is making you too anxious. 

Just remember that a decline in a major stock index is not the same percentage loss you may experience with your investments. “Look at your portfolio a little bit differently than you look at the news headlines around what happened to the S&P 500,” said Brad Klontz, a CFP and psychologist and managing partner of YMW Advisors in Boulder, Colorado. “Chances are, that’s not where all your money is.”

If you’re living paycheck to paycheck, reconsider ways to build cash reserves for a cushion in case of emergencies.

“Get creative,” said Winnie Sun, a co-founder and managing director of Sun Group Wealth Partners in Irvine, California. She said you could take on a side gig, like delivering DoorDash, or sell appliances, furniture or clothes you no longer need on eBay or Poshmark.

Sun and Klontz are also both CNBC Advisor Council members.

Sun recommended that, if you’re a homeowner, you should open a home equity line of credit at a bank or credit union if you qualify. “You want to have it in place as an emergency line in addition to your emergency fund,” she said.  After all, having sufficient cash reserves brings peace of mind — and that’s priceless.