Financial Spring Cleaning: Simple Steps to Refresh Your Finances This Semester
As the spring semester wraps up, university faculty and staff have a chance to do a little financial spring cleaning. Taking time to review and refresh your personal finances every so often is important for several reasons:
- Goals Evolve: Life changes, and so do financial priorities. Periodic reviews can help ensure your goals remain aligned with your current and future needs.
- Awareness Leads to Control: Understanding your financial position gives you clarity and confidence in your decision-making.
- Efficiency and Optimization: Taking a closer look can reveal overlooked opportunities and smarter strategies for managing your resources.
Here are a few key areas to review as you tackle your financial spring cleaning this year:
Revisit Your Short-, Mid-, and Long-Term Goals
Start by reviewing your financial goals and timelines. Have your priorities shifted over the past year? Is a home renovation, a sabbatical, or early retirement on the horizon? Whether your goals are big or small, listing them by time frame (short-term: 1–3 years; mid-term: 3–10 years; long-term: 10+ years) can serve as a roadmap for future planning.
Reassessing goals also helps determine your current risk tolerance. As an important financial goal draws near, consider moving to a more conservative investment strategy. If your goals are further out, you might want to take on more risk for potential long-term growth. Either way, aligning your investments with your financial goals is an important next step for success.
Financial Advisor Evaluation Checklist
Our Financial Advisor Evaluation Checklist outlines the questions you should ask any advisor or firm you’re considering hiring. Using the Checklist, you can make side-by-side comparisons of potential firms designed to help you feel confident in taking the next step.
Understand Your Current Financial Position
Reviewing and recording your assets and liabilities is a great next step in this process. Creating a net worth statement allows you to track down and document all your assets and liabilities in one place to help you better understand your current available resources. This also provides a snapshot reference to compare your progress moving forward, allowing you to monitor your progress and adjust your plan if needed.
It’s also a good opportunity to review details like how many accounts you’re managing, the rates on your loans, your ability to clear smaller debts, and options for putting surplus cash to work through investments.
Review Your Income and Savings Strategy
Effective cash flow planning is essential to pursuing your financial goals. Begin by evaluating your current income and monthly spending. Are there ways to free up additional cash flow? Could you redirect unspent funds into savings or investments?
If you find a growing cash balance in your checking account, it may be a signal to increase your retirement contributions or build a more robust emergency fund.
To save more efficiently, automate your savings by increasing your withholding for retirement contributions or directing a portion of your paycheck flow directly into a higher-yield vehicle or investment account.
University professionals should also explore and become familiar with their retirement plans. If you want to allocate more to your retirement plans, ensure that you are fully taking advantage of the employer matching and allowable contributions to your employer-sponsored plans, and check with your human resources department to see if they have additional retirement vehicles for your savings. Often, universities carry a voluntary or deferred compensation plan that allows for additional retirement savings.
Review whether your savings strategy aligns with your time-based goals. For shorter-term goals, consider using higher-yield, more conservative investments. For mid- to longer-term goals, a taxable brokerage account to invest excess cash can be a great way to benefit from the potential long-term growth investing provides.
Refresh Your Tax Plan
Tax planning is another essential component of your financial health. To get a picture of where you might land for the current tax year, start by reviewing last year’s tax return, noting any significant changes in income, deductions, or credits that could affect your tax situation this year.
Tax surprises can be common for university professionals, especially those with variable income from consulting, royalties, or summer teaching. Proactive planning can help avoid unexpected tax liabilities and penalties.
Key areas to evaluate when reviewing your taxes are:
- Whether to make pre-tax or Roth retirement contributions.
- Which tax-efficient charitable giving strategy works best for the given year.
- The need to make estimated tax payments.
- Potential for tax-loss harvesting if you hold taxable investments.
Bottom Line
Just like tidying up your home or workspace, financial spring cleaning can provide clarity and help you pursue peace of mind. It allows you to reset your plans, correct your course if needed, and make smarter financial decisions moving forward. Staying proactive about your finances lets you plan for your goals more effectively and can help eliminate future surprises.
If you’re unsure where to start or want a second opinion, a financial planning professional can provide guidance tailored to your personal goals and circumstances.
To help you get started, take our Ideal Futures® Financial Health Assessment. It’s a three-minute exercise that provides an objective and wide-ranging audit of your current financial situation, helping prioritize what aspects of your financial situation need attention so you can create a plan of action.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.