Don’t look now, but Tax Day is just around the corner.
We say this not to kill your vibe (promise). Temperatures are warming up, and we’ll all soon be swept up in summer fun.
That’s why now’s the time to do a little spring financial cleaning. Before all the graduations, road trips, and weddings temporarily short circuit your brain’s budgeting apparatus.
So pick a time, throw some music on, and knock out these three essential spring cleaning tasks.
1 | Consolidate your accounts and feel the power of one BIG number
Investing and savings accounts can pile up over the years and become a little like that loose change lying around your house and car. A few quarters here, a handful of dimes there. It doesn’t seem like much separately. But it adds up.
401(k)s and IRAs are no different. A couple thousand in this one, a few hundred in that one. Sometimes there’s an account you forget about every year until the tax form comes.
All that splintering of your money has several potential drawbacks, especially when it comes to investing accounts:
- External accounts serving the same goal could have wildly different levels of risk.
- External accounts miss out on our tax coordination perks and make it harder to use our Tax Loss Harvesting+ feature without incurring a wash sale.
- Last but definitely least, lots of small accounts can keep you from noticing your progress and celebrating a milestone. Special milestones like $25k, $50k, or even $100,000 saved for retirement.
So we encourage you to consider rolling over old 401(k)s and IRAs into one place. If you’re not in love with the 401(k) plan a previous employer offered, you can even roll that into an IRA if it’s the right call for you.
At the very least, it may spare you a few forms to input come tax time.
2 | Travel back in time and save some more
Maybe you set the goal of maxing out your IRA last year and fell short. But you’re flush with cash now, possibly thanks to a bonus or a big tax refund that’s on the way.
You’re in luck, because the IRS essentially lets you time travel for a saver’s do-over. You have until Tax Day of this year to max out your IRA’s limits for last year.
Doctor Who approves.
And we make it easy in practice. While making a deposit into your IRA, just select the tax year you want the deposit to go toward.
3 | Take a fresh look at your cash goals
The early days of spring are an excellent time for a quick cash gut check:
- Do you have enough pocketed for that family vacation?
- Is your emergency fund funded to a point where you feel financially secure?
- If your tax return came back in the red, can you comfortably cover the expense?
If you answer no to any of these questions, now’s the time to reassess your cash flow and redirect it to the right spots.
