I’m a personal finance expert: Here are 5 ways I spring clean my own finances

Just like your home, your financial house needs regular maintenance to stay in tip-top shape. What better time to freshen up your finances than spring?

As a personal finance expert, I recommend these five strategies to spring cleaning for a financial fresh start.

1. Inventory your assets and liabilities

Creating an inventory of everything you own and everything you owe is an important step in organizing your finances, especially as you plan for or approach retirement.

Assets can be personal property — like your home, vehicles, art, valuable collectibles and jewelry — or accounts, like your bank accounts, brokerage accounts and retirement accounts.

Liabilities are your debts, such as mortgages, car loans, credit card balances and any other money you owe.

You can create a financial snapshot in five steps:

1. Make a list of your assets and their current values. For property and vehicles, use online resources or recent appraisals to estimate their worth.

2. Make a list of all your liabilities and the current balance owed.

3. Organize these lists in a spreadsheet or a legible document.

4. Store the inventory securely in a safe deposit box or with your estate planning documents, and let your loved ones know where to find it.

5. Update your list quarterly or annually as your assets and liabilities change.

💡 Expert tip: Having this snapshot helps you gauge progress toward your financial goals and identify areas where you need to make improvements, such as increasing your savings or paying down debt. It’s also incredibly useful for your loved ones in case of an emergency.

2. Shop around for new insurance

Your insurance needs usually shift as you age. For instance, you may need less life insurance if you’re mortgage-free or your kids have left the nest. Or you might want long-term care insurance to protect your wealth from unexpected medical costs down the road.

As you spring clean your finances, take a moment to review your insurance policies and shop around for new ones:

1. Gather your current insurance policies — those for health, life, auto, home and any others.

2. Review your coverage, deductibles and premiums for each policy, and identify any gaps or redundancies in your coverage.

3. Compare quotes from insurance providers online for each of your coverage needs to see if you can get better rates or stronger coverage.

4. Consider the insurer’s reputation, customer service and financial stability while narrowing down your options.

5. If you find a cheaper deal or better coverage, switch providers or update your current policies accordingly.

Dig deeper: 18 clever ways to save money — and take a bite out of inflation

3. Leverage high savings rates

How much are you currently earning on your savings account balances? If you bank with institutions like Bank of America, Wells Fargo or Chase, there’s a chance it’s not much more than the 0.47% national average — or less.

But with interest rates at record highs, now could be the perfect time to tidy up your earning potential with higher savings rates.

Digital and online banks are offering high-yield accounts that earn well over 4.00% APY. These banks are FDIC-insured and just as safe as the banks in your neighborhood. But because they have lower overhead costs, they’re able to reward savers with much higher rates.

Let’s say you have $20,000 in savings:

• At 0.01% interest, you'd earn only about $2 per year.

• But at 4.00% interest, that same $20,000 could grow by $800 in a year — without any extra effort on your part.

Making this one simple switch could drastically increase your savings growth and help you reach your goals with a larger nest egg. It's a smart, easy way to spring clean your finances and set yourself up for a more secure future.

To take advantage of high savings rates, consider putting a part of your nest egg in a high-yield savings account or money market account, which offers access to your money that’s similar to a traditional account. Or lock in today’s high rates with a certificate of deposit offering strong fixed rates even on shorter terms of up to a year.

Look for accounts with no or low minimum balance requirements or maintenance fees. And once you find the best fit, open an account and transfer your savings.

4. Fine-tune your investment mix

Next up, it’s time to review your investment withholdings.

When you're younger, you can afford to take more risks with your investments because you have time to recover from market fluctuations. But as you approach retirement, it's wise to gradually shift your portfolio toward more conservative investments to preserve your wealth.

Here are a few areas of your investment to consider when sprucing up your finances:

• Asset allocation. Make sure your portfolio is well diversified among different asset classes to minimize risk and maximize returns.

• Risk tolerance. Assess your comfort level with market volatility, and adjust your investments accordingly. Generally, risk tolerance tends to decrease with age.

• Time horizon. Consider how long you have until retirement or how long your savings needs to last. This will help determine the appropriate mix of investments.

• Rebalancing. You may need to rebalance your portfolio to get back to your desired asset allocation. (As the market fluctuates, it can shift your allocation over time.)

💡 Expert tip: While it's possible to fine-tune your investment mix on your own, it's highly recommended to meet with a financial advisor. An advisor can help you adjust your asset allocation to match your risk tolerance and retirement goals.

5. Update your estate plan

Updating your estate plan — or creating one — is another key step in spring cleaning your finances. An estate plan makes sure your assets are managed and given out the way you want, and can help reduce taxes and legal fees for your loved ones.

Review these five main parts of your estate plan for updating:

• Will. Make sure your will clearly states how you want your assets divided and who you want to be in charge of carrying out your wishes.

• Trust. If you have high-value assets, a trust can help you manage your assets and estate according to your specific instructions after you’re gone.

• Beneficiary designations. Check and update who you've named as beneficiaries on your retirement accounts, life insurance and other assets to make sure they match your current wishes.

• Power of attorney. Choose a trusted person or agent to make financial and legal choices for you if you can't do it yourself.

• Healthcare directive. Pick someone to make healthcare decisions and ensure your medical treatment preferences are followed, even when you can’t communicate them.

💡 Expert tip: Have you had any big life changes like marriages, divorces, births or deaths in the family? Don’t forget to update your estate plan accordingly. Talk to an estate-planning attorney to ensure your documents are legally sound.

About the writer

Cassidy Horton is a finance writer who specializes in banking, insurance, lending and paying down debt. Her expertise has been featured in NerdWallet, Forbes Advisor, MarketWatch, CNN Underscored, USA Today, Money, The Balance and Consumer Affairs, among other top financial publications. Cassidy first became interested in personal finance after paying off $18,000 in debt in 10 months of graduation with an MBA. Today, she's committed to empowering people to stand up and take charge of their financial futures.