Spring is all around us. The grass is greening, flowers are blooming, temperatures are slowly rising, and families across the country are getting out the broom and dustpan. According to a survey from the American Cleaning Institute, 80% of Americans will engage in some form of spring cleaning this year.
For most, spring cleaning means scrubbing the baseboards, washing the windows or doing a once-yearly vacuum under the couch. But Spring is a perfect time to consider aspects of your financial life that could use some tidying as well.
“Spring is a time to celebrate all that is new coming out of winter but can similarly represent an opportunity to reflect on our financial health, evaluate habits and identify new opportunities to grow our wealth,” said Jennifer Lee, Head of U.S. Markets at PNC Private Bank.
While you’re organizing the garage or laundering the drapes, consider these seven opportunities to refresh your finances:
1. Prepare for Taxes
Tax Day may be April 15, but preparing for taxes is a year-round endeavor. Spring is a perfect time to examine any changes in status, planned gifts, or investments that may trigger new tax events. If you anticipate a significant tax bill, make your plan to set aside funds or even borrow to pay your future tax bill.
Additionally, you may consider strategies to offset tax liabilities with losses or invest in more tax- favorable assets such as ETFs or municipal bonds. Before making significant changes to asset allocation or selling securities, it’s always best to discuss changes with your financial and tax advisors.
2. Revisit Your Insurance Needs
Insurance may not be the most exciting part of your financial plan, but it’s not one to overlook. Home improvement projects, new cars, boats, collections, or financial windfalls can change your net worth and liabilities over the course of a year. Review your existing coverage, where there may be gaps and if you might need additional coverage through your homeowners, auto or an umbrella policy. You may consider specialized insurance solutions for collections like art, jewelry, or fine wine that may not be covered through homeowners’ insurance.
Additionally, it’s important to review the policy terms of your existing coverage to make sure premiums and deductibles are in line with your needs. Insurers can and do change policy terms from year to year, so it’s important to verify that what you have is serving your needs from both a coverage and cost perspective.
3. Review and Rebalance Your Portfolio
A lot can happen in a year and it’s important that your investments reflect the best interests of your current life situation and long-term financial goals. Whether market conditions have you too exposed to a specific asset class or a life event means you’re ready to take on more or less investment risk, it’s good practice to take at least an annual look at your portfolio.
“You might discover that you need to make adjustments, or it might confirm that you’re still on the right track. The important thing is that you take the time to look,” Lee said. “Reviewing your portfolio on a scheduled basis is primary to financial health.”
If you do make adjustments to the asset mix as part of an annual review, it’s important to consider any cost and tax impacts.
“And remember, rebalancing a portfolio is less about timing the market just right and more about serving long-term financial goals,” Lee said.
4. Plan for Major Purchases and Evaluate Reserves
Think through your sources of income, how you’re spending money and how both factors are impacting financial goals. Do you plan to make a major purchase, such as a vacation property, boat or fund a child’s college education? Are there opportunities in the year ahead to re- evaluate how you are using debt? Now is a good time to think through short-term financial goals and plan for how to achieve them without sacrificing your long-term wealth.
Part of long-term security is making sure you have adequate reserve funds in the case of unexpected expenses. Assessing what you are contributing to your reserves and how those funds are invested to grow long-term is good annual maintenance.
5. Revise Planned Gifts
Do you have an annual gift to a nonprofit, or plan on making a significant financial gift to family over the course of the year? An early year financial review can be a good time to revisit how, when, to whom, and how much you plan to give.
Over the course of a year, changes to the status of beneficiaries, nonprofits, and legislation can mean significant tax liabilities to both donors and beneficiaries that may require changes in your gifting strategy. Additionally, you may have new or fewer beneficiaries to consider.
Read more: Learn more about gift tax exclusions and other strategies for making annual gifts.
6. Update Your Business Succession Plan
Like your portfolio and planned gifts, if you’re a business owner, it’s important to revisit your business succession plan on at least an annual basis. Think through any factors, like financial performance or personnel changes that may impact when or how you plan to transition your business. If the eventual transition of your business is a major factor in your retirement planning, you may need to think about timing and the potential allocation of business assets to serve your lifestyle needs once you’re finished working.
Like your portfolio, reviewing your business succession plan may mean nothing more than affirming that you’re still on the right track.
7. Meet with Your Advisor
Want an extra bit of shine on your hardwood floors? You may need to enlist a professional. Likewise, spring cleaning your finances is an ideal time to check-in with your financial advisor to ask questions, make adjustments, or simply ensure you’re still on track to meet your long-term financial goals. It can also be a good time to examine your advisor relationship, identify gaps, assess costs and – if necessary – add services.
“Just like tidying the house after a long winter, spring cleaning our finances may not seem like the most exciting thing to do. But it’s important and you don’t have to do it alone,” Lee said. “Working with an advisor can help give you the peace of mind that you’re already doing what you need to do, or even course-correct to better align with your long-term goals.”
