Clean out your financial closet

See tips to take action now to better organize and plan your financial life.

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Print

Key takeaways

  • Inflation is running high, so it makes sense to review your spending to see if there’s any fat to be trimmed.
  • Make sure your long-term investment mix has enough growth potential to achieve your goals.
  • Good credit can help you qualify for lower interest rates to help finance things like cars, homes, and other necessities. Know your credit score.
  • An organized record-keeping system can help make your life easier. If you haven’t started one, now is a good time to do it.

Many people find that cleaning and organizing their home can be soothing as well as productive. Decluttering, dusting, and scrubbing can breathe new life into your home and help you feel more relaxed.

The same can be true for cleaning up your finances. Here are some tips to help you get better organized, feel empowered, and take control of your financial future.

Get more Viewpoints. Sign up for the Fidelity Viewpoints® weekly email for our latest insights. Subscribe now.

Review your spending and savings

Rising prices have hit many consumers right in the pocketbook. Prices have been painfully high for months and that means most of us are spending more on essential daily expenses, which could lead to saving less or even running up debt.

To get through this period of inflated prices, it can make sense to go back to the basics and take a close look at your budget. Just reviewing your spending for the past month or 2 could uncover some ways to keep more of your money in your pocket. You may have recurring memberships or subscriptions that you’ve forgotten about or there may be other leaks in your cash flow that could be fixed with relatively little pain.

Read Viewpoints on Fidelity.com: 50/15/5: An easy trick for saving and spending.

Revisit your investing strategies

The surge in inflation highlights the importance of investing for growth potential.

When was the last time that your portfolio had a regular checkup? If you're not sure about how recent market activities have changed your mix of stocks, bonds, and cash, check your asset allocation in Fidelity.com's Planning & Guidance Center. Or connect with a financial professional to see if you have a diversified mix of stocks, bonds, mutual funds, ETFs, cash, and other investments that are aligned with your overall investment and retirement goals.

Time to rebalance? Even if you have an investment plan in place, it's a good time to review it. A 60/40 stock/bond portfolio could be off your target allocation by 5% to 10% due to the recent market drop. If your asset mix has shifted significantly from your target, consider rebalancing or making contributions to gradually get back to your target asset allocation.

Not comfortable doing that on your own? Consider meeting with a financial professional who can help you rebalance. Don't have a financial plan and target asset mix? Now's a good time to get one. And there are lots of options ranging from a robo advisor to a full service advice relationship.

Get tax-smart

Looking for tax-free growth potential and tax-free withdrawals in retirement? Then consider a Roth IRA* or a Roth IRA conversion. Not everyone can contribute to a Roth IRA because there is an income limit. But it's still possible to have a Roth IRA—by converting money in a traditional IRA or other retirement savings account.

Did recent market moves create tax planning opportunities for you? Consider the potential of tax-loss harvesting to help lower capital gains taxes. Tax-loss harvesting allows you to sell investments that are down, replace them with reasonably similar investments, and then offset any realized investment gains and a small portion of ordinary income with those losses. The end result is that less of your money goes to taxes and more stays invested and working for you. The rules can be complex.

If you have a financial advisor, they may already be doing your tax-loss harvesting. If you're doing it yourself, it's always a good idea to consult a tax professional.

Lastly, another tax-savvy savings option to consider: maximizing the use of health savings accounts, if available.

Check insurance coverage

Do you have the proper insurance coverage to protect your family? In addition to reviewing your homeowners/renters and auto policies, consider adding affordable personal liability umbrella coverage which protects against the potential financial fallout of certain types of unforeseen events that lead to property damage or injury, for which the policyholder is held responsible.

Maximize company benefits

Are you making the most of your employee benefits? You may be leaving money on the table if you aren’t.

  • Find out if your company offers tuition reimbursement, student loan relief, disability insurance, FSAs for dependent care, vision or dental coverage, or even pet insurance.
  • Take advantage of the benefits that make sense for you, especially the ones that do not require a financial outlay on your part.
  • Some employers help workers transition into retirement and offer benefits such as financial coaching, and the ability to move to part-time work or a flexible schedule.

Credit cards, mortgages, and student loans

How's your credit? Good credit can help you qualify for lower interest rates to help finance things like cars, homes, and other necessities. It can also help you get lower car insurance premiums. To start, know your credit score: annualcreditreport.com offers a free review every year. Check with your credit card company; they may also provide free access to your FICO score. Here are some credit card tips to consider.

Need help with student loans? The CARES Act suspends payments on federal student loans and waives any interest on the loans through the end of August 2022. You may continue to pay down principal and benefit from the 0% interest rate. See tips for parents and students to understanding, managing, and paying off student loans.

Estate planning and other important paperwork

If you do not have complex planning needs, a basic estate plan can be completed online in approximately 1 to 3 hours and may cost less than $1,000 in legal fees. Consider using the Fidelity Estate Planner®, a free online tool for Fidelity customers that you can use to collect and organize information that you can then share with an attorney for your estate plan.

Plus, through the Fidelity Estate Planner's "Find an Attorney" service, you can connect to professional legal resources including LegalZoom® that you'll need to create your estate plan. These are good places to start while estate planning attorneys navigate the transition to digital document creation and execution.

Be sure to obtain other documents that can help round out your estate plan: an advance health care directive, a power of attorney for finances, and a health care proxy.

Review and, where applicable, update your beneficiaries on your financial accounts. It's easy to do and only takes a few minutes online.

Read Viewpoints on Fidelity.com: Estate planning for the digital era.

Organizing and storing financial documents

Like insurance, good record-keeping is one of those things that pays off when you really need it.

If you don’t already have one, consider setting up a filing or other record-keeping system. Keeping important documents (birth and death certificates, living wills, insurance policies, power of attorney, and other financial information) in good order and easily accessible will be helpful to you, and it can also help your family in a worst-case scenario.

Putting it all together

If you need help in getting and staying organized financially, it may be a good time to consider working with a financial advisor or visiting Fidelity Planning & Guidance Center.

Next steps to consider



Visit Life Events


Tools, resources, and tips to help you navigate life's big moments.



Read more Viewpoints


See our take on investing, personal finance, and more.

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Print
close
Please enter a valid e-mail address
Please enter a valid e-mail address
Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: "

Your e-mail has been sent.
close

Your e-mail has been sent.

Sign up for Fidelity Viewpoints®

Get a weekly email of our pros' current thinking about financial markets, investing strategies, and personal finance.