5 ways to spring-clean your finances
Morgan Stanley Wealth Management02/12/24
Summary: A lot can pile up over a year, or just a season. Here are five tips to help you tidy up, declutter and organize your finances this spring.
For many, spring means opening windows, sweeping the dust out and rotating wardrobes. While you’re freshening up your home, consider ways to also tidy up your finances. You may be surprised at what’s hiding in your accounts, inboxes, financial documents and tax returns.
Here are five strategies to help you:
1. Clean Up Your Accounts
Do you find it challenging to keep track of your various financial accounts? Many people have checking or savings accounts at one bank, a brokerage account with another, an individual retirement account with yet another, and 401(k) accounts with the retirement provider of several old employers. Having a number of accounts at different institutions can make your financial house feel disorganized
To gain a clearer understanding of your financials and overall wealth:
- Consider consolidating your bank accounts – E*TRADE from Morgan Stanley offers options.
- You could also roll over your old 401(k)s into one place.
Or, if you prefer to maintain accounts with different financial institutions, take advantage of any digital tools that they may provide to let you see all of your accounts in one place. Getting that full picture can bring a fresh perspective about what you need to prioritize, as you manage day-to-day cash needs and pursue your longer-term goals.
2. Declutter Your Debt
Do you ever feel like your debt is in disarray? Or that so much debt is preventing you from tackling goals like saving for a house or investing for retirement? If you have multiple loans and credit cards, with different interest rates and payment dates, it might be time to consider debt consolidation. Paying off your various debts via a single loan with a competitive interest rate not only helps you save money, it also leaves you with one simple payment date each month. Or you may choose to pay off debt like your student loans in multiple strategic ways. Having a plan may help reduce financial stress.
3. Toss Out (Some) Paper
If you’re still getting paper statements from financial institutions, why not change your preferences to “paperless” notifications? This includes credit cards, loans, brokerage accounts—even bills. Going paperless reduces the amount of physical clutter in your home, and it’s also more ecofriendly. When you receive statements digitally, you can more easily track your finances because your statements are all in one place.
As for existing paper records, you should definitely keep (digitally if possible, but paper records if not) the past seven years of tax documents and any documents related to still active loans or asset ownership, like the title on your car and any home ownership documents.
4. Organize Your Income and Expenses
When was the last time you took a long look at your monthly finances? Just as going through your whole closet can help you decide what to toss or keep, taking inventory of your income and expenses can help you cut wasteful spending and make smarter financial decisions.
With a clearer picture of your budget, you can more carefully track how much you are saving for near-term goals, such as buying a home, as well as long-term goals, such as retiring by a certain age.
5. Plan for Future Tax Seasons
Some ease the burden of annual spring cleaning by scheduling deep cleaning days throughout the year. Similarly, tax planning may require your attention at multiple points throughout the year, not just during tax-filing season. Whether before or after Tax Day, it’s never too late to incorporate tax-efficient strategies into your financial plan.
Consider a combination of the following strategies:
- Tax-loss harvesting: Involves selling securities at a loss and using such capital losses to offset capital gains in taxable investment accounts and help lower your taxable income.
- Tax-aware asset allocation: Different kinds of accounts are taxed differently. A tax-aware asset allocation strategy that accounts for those differences may help to increase after-tax returns.
- Tax-favorable investments: Many investments, such as municipal bonds, government-backed bonds, tax-efficient mutual funds and 529 plans, may allow you to save for a variety of goals while also offering tax benefits.
Your efforts today truly reflect the financial future you desire. Sometimes, getting there requires a bit of decluttering and reorganizing—with a little help going a long way.
How can E*TRADE from Morgan Stanley help?
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