Spring Clean Your Finances…Starting With Your Tax Refund

Tax Refunds Spring Clean your Finances

It’s that time of the year again when everyone gets busy collecting receipts, 1099s, W-2s, and other financials with the April 18th tax filing cutoff fast-approaching. If you’ve already filed, congratulations for making your annual government contribution! But wait, that’s not all –  if you’re like close to 75% of American taxpayers, you might even be receiving a tax refund!

So, what are your plans for these shiny dollars? Of course, you’ll want to channel the money into something productive. With this in mind, here are a few tips on how you can stretch your tax refund and spring clean your way to an organized financial house.

1. Purge and Reinvest 

Do you have investments that are cramping your portfolio and no longer add value? Maybe even own stocks that went penny on you? Consider removing them from your portfolio this spring. Sell, gift, or if they have no value, just have your brokerage firm take them off your statement. After that, you may be able to write-off the loss from the sale of the non-performing securities on your next tax return, and you can talk to your financial advisor about reinvesting the proceeds along with your refund to something more diversified.

2. Get Your Insurance in Order

A lot of us have bought home, auto and life insurance policies in the past that are no longer relevant to your current needs. Not only is the proper amount and type of insurance vital for your financial plan, but it also helps to protect your family and loved ones against unforeseen adversities. So, take this opportunity to review your current policies or purchase a new one in case something unexpected happens to you or your business in the future.

3. Auto-Invest and Build

You’re probably already familiar with auto-investing if you contribute to your employer’s 401k or 403b plan. But did you know that you can do the same for just about all your investments? Set up auto-investing for your child’s education savings account, your SEP IRA, Traditional or Roth IRA, etc. And most of all, send your tax refund directly to your checking account that gets pulled for these auto-investing strategies.

4. Update Your Beneficiaries

Spring offers such a great opportunity to clean-up those records that you haven’t reviewed in a while, like checking your beneficiaries. From your living trust, your health insurance to all your retirement accounts, update your records, especially if you have had changes in your life such as a new marriage, new baby, inheritance, or new home.

5. Organize Your Financial Records

Now with the tax season close to an end, it’s the perfect time to get your files organized. Pull out the label marker and streamline your records. If you’re like me, include a digital file on your computer or cloud. Keep this together with your living trust, your important passwords, and the business cards of your advisors so that if there’s ever a need, someone will know who to call.

Winnie Sun is the Managing Director and Financial Advisor at Sun Group Wealth Partners, a wealth management firm in Southern California. A regular contributor to Forbes, Investment News Named Her ‘Twenty Women To Watch’. To learn more about her or to book your own complimentary consult with Winnie, visit here.

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