It's Time For Financial "Spring Cleaning"

Spring Cleaning

The days are longer and the temperatures are warmer – so it must be spring. For many of us, that means it’s time for some spring cleaning. But why stop with sprucing up your living space? This year, consider extending “spring cleaning” and take a fresh look at your finances too.

Here are five financial spring cleaning tips you might want to consider. 

1. Re-evaluate your budget

Spring is a great time to take a good hard look at your budget. Has anything changed since January when you established your financial goals? Perhaps you received a raise at work or purchased a house or a car. If so, revisit your budget to ensure it reflects the new numbers.

Budgets may seem like a lot of extra work, but think of it as having a spending plan in place so that you know exactly where your money is going. Look at your current income and expenses, and make sure it is still accurate and represents both your short- and long-term goals.

2.Get rid of what you no longer need

When you clean your home thoroughly, you end up disposing of all kinds of things – some of which you may have even forgotten you own. The same principle might apply to some of your investments. Speak with your financial advisor to see if you still have some holdings that are no longer appropriate for you and are best removed from your portfolio.

3. Trim back your duplicates

If you went through your house carefully, you might be surprised at how many items serve the same purpose. For example, do you really need two toasters? There may be similar redundancies with your investment portfolio. For example, you may have two stocks issued by different companies that sell similar products. Instead, you might find it’s much better to exchange one of those for a different company in a different sector to boost your diversification. While diversification cannot guarantee a profit or protect against a loss, it may help reduce the effects of market volatility.

4. Put things back in order

Many of us tend to have messy closets and storage sheds because over time we’ve haphazardly tossed item after item into them. There may not be anything that has to be thrown out, but a good clean-up is needed to organize everything properly. Similarly, your portfolio may need a good spring shake-out. For instance, you could have too much of one investment and too little of another. This could mean you are taking on too much risk or, conversely, that your holdings have become too conservative to provide the growth you need. As a result, some important re-balancing could be required to get your relative weightings back in tidy order, especially in light of the market changes we have seen in recent months.

5. Protect your family’s financial future

When cleaning up this spring, you may notice areas of concern around protecting your home – perhaps there’s a crack in your window, or your fence is damaged or part of your chimney is crumbling. Your financial independence – and that of your family – also needs protection. Is your life insurance sufficient to pay for your mortgage, post-secondary education for your children and perhaps some retirement funds for your spouse if you become ill or pass away unexpectedly? Do you have disability insurance that can provide you with some income if you become ill or injured and can’t work for a while? Have you considered the high costs of long-term care, such as an extended nursing home stay when you are retired? A financial professional can help you determine if your insurance coverage is adequate for all these needs.

By working with your financial advisor for your portfolio’s spring cleaning, you can help make sure your investment holdings are up-to-date, appropriately suited to your needs and well-positioned to help you make progress toward your long-term financial goals.

We can help

At Edward Jones, we can help you work toward achieving your financial goals. Contact your local Edward Jones advisor about a financial strategy that makes sense for you.

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