"Spring Clean" Your Finances With Suze's Checklist


Emergency Fund, Insurance, Retirement


May 12, 2022

Spring is now in full swing, and I hope that you are enjoying every bit of it.

I know this seasonal shift triggers all sorts of home organizational/cleaning projects for many of you. I wish you would feel the same about taking a fresh look at your finances as well. Yet 80% of people recently surveyed by Lincoln Financial said they are more motivated to dig into home-based projects like scrubbing down the kitchen and dusting everywhere, than committing to a financial spring cleaning.

Please don’t be that short-sighted. I realize giving your finances a seasonal review may not scream fun, but it will be incredibly rewarding. A seasonal review is how you avoid costly mistakes and make sure you, and your loved ones are protected no matter what happens in the seasons to come.

Here’s my shortlist of what to review right now.

Life Insurance

If there is anyone in your life who depends on your income, you need life insurance. In the survey, nearly 80% of respondents said they would rather scrub kitchen appliances than figure out how much life insurance they need.

Let me make it easy for you: My advice is to consider a term life insurance policy with a death benefit that is at least 20 times the annual living expenses of your loved ones. I know that sounds like a lot, but term life insurance is incredibly affordable. And a death benefit equal to 20x (25 times is even better) your family’s income needs means they would be able to invest the death benefit in high-quality bonds and live off the interest, which will give them so much financial security.

Retirement Portfolio

In the survey, three out of four respondents said cleaning out their closets was preferable to reviewing their 401(k) investments.

To be clear, I am a huge fan of closet cleaning (selling or donating what you don’t use benefits you and others), but I do not get the implicit dislike of giving your investment strategy a solid review.

Being a long-term investor does not mean you don’t have to pay attention to what you own. Is your mix of stocks and bonds still right? Your 401(k) provider or the brokerage where you have your IRA account will have free tools to help you analyze the right mix given your age, goals and risk tolerance.

As part of that review, if you are at least 50, you really need to start seriously estimating the income you want to have in retirement, and then adjust your planning to make sure you can hit that target. Yet nearly 6 in 10 survey respondents said that chore was less appealing than dusting off every shelf in their home.

Are you kidding me? Right now is when you still can figure out strategies to close any gap between what you want to have in retirement, and what the calculators suggest you may have. If you wait until you retire, you will be out of time to make adjustments. Now is the time to spring into action.

Emergency Saving

If you are an avid reader of my articles and listen to my Women & Money podcast, I am going to assume you are working on building an emergency savings fund that could cover up to 12 months of living expenses. My question right now is whether you might be able to increase what you’re setting aside each paycheck, or each month to build up your emergency fund. Might you be able to add $10 more? Or $25? Are you going to soon receive a tax refund (maybe state too?) If so, I sure hope you consider putting it to the best possible use in building financial security. Adding to your emergency savings should be one item on your financial freedom checklist.

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