You’ve dusted the ceiling fan, swept beneath the couch… you’ve even washed the curtains! But have you given any thought to your financial cleanliness? The changing seasons can provide a helpful reminder to examine some areas of your financial health that can use a yearly checkup. We’ve compiled a list of checklist items that can help you spring clean your finances. By taking a look at each item on this list at least once annually, you can establish healthier financial habits all year round.
Change Your Passwords
Ideally, you should change important passwords more than once a year (a new password every 90 days is optimal), but if you find that you simply haven’t thought about updating passwords recently, spring cleaning is as good a reminder as any. Some of the most important passwords to change include:
- Online banking
- Credit card accounts
- Any third party payment services (like PayPal or Venmo)
When it comes to choosing a strong password, the guidelines have changed from what they once were. Mixing special characters, capital letters, and numbers can be really tough for humans to remember. And, in an effort to make them more memorable, many patterns have emerged that actually make passwords easier for hackers to predict. Using a 7 in place of an L or a 3 instead of an E, for example. Or simply tacking 123 at the end of a common password phrase. A more effective tactic to creating a strong password is to think of a string of random words that incorporate a lot of characters, but are easy for you to visualize. Something like, “PurplePecansInTheParkingLot” would be an excellent password, for example.
Another important best practice for password safety is to avoid using the same password for all your accounts. This is especially important for your bank accounts because if you have a security breach on an unrelated online service, cyber thieves could easily attempt to access your money by plugging that same password into your online banking.
Review Your Budget
Take a look at how you’ve been spending your money throughout the year and identify any areas you could improve on. Credit card bills make it pretty easy to see your biggest expenses each month because they’re typically organized by category (groceries, gas, services, retail, etc.). Part of your financial spring cleaning should include finding ways you can improve your spending habits so that you can put more earnings into savings. It’s also a good time to see if you can renegotiate the costs of cable, subscriptions, internet, etc.
Look at Your Credit Report
Knowing where you stand is the first step to improving your credit score. Everyone is entitled to a free and complete credit report every 12 months. By meeting with a banking expert, you can learn this information without hurting your score. From there, you can figure out the areas in need of improvement. This report will also reveal if there’s been any suspicious activity on your credit card.
Some common ways to improve your credit score include:
- Avoid late payments (set up payment reminders)
- If you carry a balance, try not to exceed more than 30% of the card’s limit
- If your balance exceeds 30% of the cards limit, consider asking for an increase
- Don’t open more credit cards than you need (resist the sales pitch at the checkout line)
- Find a credit card with good benefits and plan to keep it for years to build a good payment history
Union Community Bank offers great resources for you to learn more about your current financial status and find out ways you can improve for the future. Contact one of our financial consultants today.
Shred Any Sensitive Documents
This is an old one but a good one—shred your documents. Think of this as the analog version of changing your passwords. Anything that might have your bank account number, social security number, or other sensitive information should be handled with care. This includes items like bank statements, loan applications, and insurance forms. The reason it’s important to dispose of documents with care is because a thief could easily sort through your trash looking for information that could be used to steal your identity. While this practice may be less common in the age of cybercrime, it’s still a good habit.
If you have any sensitive papers you’ll need to refer back to for any reason, keep them in a secure place. A safety deposit box is best, but if you need to keep them in your home, you may want to invest in a fireproof safe. This includes items like: the deed to your house or car, your social security card and birth certificate, your tax return information, or other long-term pieces of information.
Set New Financial Goals for the Year
Do you want to focus on paying off a high interest debt? Do you want to complete a home renovation? Figure out what you want to achieve in the next year and then find out how to make it happen. Reaching your goal may mean making some lifestyle changes or taking out a loan. Taking the time to plan out your finances before diving into a project will save you a lot of headaches down the road.
Spring is a season for fresh starts. It’s the perfect time to open the windows, sort through all the stuff that’s accumulated during the colder months, and give everything a good scrub. The same should go for your finances. Use the new spring energy to propel you toward a cleaner financial state.