10 Ways to Clean Up Your Finances

No matter the current state of your finances, there’s always room for improvement. Most of us change our long-term financial plans as we move past life’s milestones, and especially after completing a debt relief program. It’s also important to create a good financial plan in the short term to help reach your goals. 

Whether your near-term goals include getting out of debt, planning for retirement, saving up for a home, or something else, these 10 tips can help you clean up your finances and move forward with more confidence.

1. Track Your Spending

One of the first priorities when you’re looking for ways to clean up your finances is to check your spending. Do you really know how much you spend, and where that money goes? You can find out by tracking how much you spend for a month. Use a budgeting app or a spreadsheet or just write down every transaction on paper—whatever is easiest for you.

Tracking your spending for one month (or two or three) is a great way to understand the bigger picture of your personal finances. Consider: 

• Were there any surprises? Did you spend more than you expected on a category? 

Example: Did you spend more than you thought you would dining out?

• Would it help you to have a separate savings account for vacations or taxes? 

Example: Are you struggling to set aside money for a goal?

• Did you overspend in certain categories where you’d like to spend less? 

Example: Was your hobby spending higher than you wanted it to be?

Reviewing your spending with a critical eye can help you set a budget going forward.

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2. Know Your Credit Score

Do you know your credit score? Do you know if it’s good, bad, fair, or excellent? If you don’t know, finding out could be a great help. Your credit score is a hugely important part of how much it costs for you to borrow money. And if you’ve had some negative credit events such as bankruptcy, late payments, or unpaid credit card debt, your credit score might have taken a hit. 

Your credit score could change from month to month. That’s normal. When it changes, find out why. It could be that your score went up because your average credit age increased. It could be that your score went down because you applied for a new credit card. 

Checking your credit score can often be done for free if you have a credit card account or other loan account. There are credit monitoring apps that help you track changes to your credit report and show a version of your credit score. Another option is to use myFICO.com, where you can sign up for a free account that shows your FICO® Score.

Keep in mind that checking your credit score is different from checking your credit report. You can see credit reports for free via AnnualCreditReport.com. 

3. Cancel Little-Used Subscriptions

In recent years, many Americans have gotten comfortable with signing up for monthly subscriptions, from food delivery to streaming services. But are you really using all of those subscriptions, or are you paying for stuff that you don’t need? Sometimes the full cost of subscriptions can sneak up on you. 

One of the easiest ways to clean up your finances and save money fast is to double-check your monthly subscriptions. You might discover that you’ve signed up for 10 or more subscriptions that cost an average of $14.99 each—and that’s $149.90 per month. If you cancel half of those subscriptions, you could spend $75 less per month, potentially saving $900 per year.  

Be decisive about which subscriptions and memberships are really giving you enough value to be worth the money. Ask yourself: 

• How many magazines or websites or podcasts do I really need to pay for each month? Could I stagger them instead?

• Likewise for streaming services. Could I drop all but one? Could I save money by buying the shows I want to watch rather than pay monthly fees indefinitely?

• Do I go to the gym, or could I cancel that membership and find ways to exercise for free?

• Do I need a meal kit service, or could I buy your own groceries and prep meals myself? 

You don’t have to make all the hard choices by yourself. There are subscription manager apps and services that help you identify and cancel your unwanted subscriptions.

4. Start Saving for Retirement

Everyone should save for retirement. That’s true even if you’re still building your credit, paying off debt, or dealing with other short-term financial goals. 

If you have a 401(k) or other retirement plan at work and your plan offers an employer match, try to put in at least enough money to get those matching dollars from your employer. An employer match means your employer is putting their money into your retirement account. It’s free money that you deserve, but you have to meet the requirements to get it. 

For example, your employer might contribute 3% of your salary as long as you contribute 6%. Your HR department can explain your options.

Even if you’re not investing much for retirement or are new to investing, take some time to learn about your retirement account and how it works. Try a robo-advisor for beginners if you want an easy way to start putting your money to work and growing your savings for the future. 

5. Get Ready for Tax Time

Worried about tax season? Did you owe money to the IRS last year? One of the best ways to clean up your finances is to get as smart as possible about your tax situation. Check last year’s tax return. Take note of how much you earned and whether you got a refund. 

If you got a big refund but your income hasn’t changed, you could consider adjusting your withholdings so you have more money on each paycheck. This is a process your HR department can explain. Consider talking to a tax professional to make sure you’re taking advantage of every way you might save on taxes.  

6. Fund 529 College Savings Plans

Whether you’re planning to go back to school or you want to help your kids pay for college, a 529 plan could help you build up funds for college and other qualifying education costs, using pre-tax dollars. You don’t have to pay federal or state income tax on the growth in your account as long as you use the money to pay for college or graduate school tuition, fees, room and board, or books. 

You can even pay for some K-12 school tuition expenses with 529 money. Depending on your state, you may be eligible to get a state income tax deduction for the money you put into a 529 plan.

7. Protect Your Identity

Identity theft is becoming a bigger problem, and millions of Americans have their personal data exposed in data breaches each year. If you’re looking for ways to clean up your finances, don’t ignore identity theft. 

Start by checking your credit report. It’s a great way to keep an eye on your accounts. If you notice an account that you don’t recognize, it could be evidence of identity fraud or identity theft. There are also identity monitoring apps and credit monitoring apps that can alert you to new accounts opened in your name. 

By law, you’re entitled to a free credit report each week via AnnualCreditReport.com, which is the only site authorized by the federal government to provide these reports for free. 

Make sure your credit reports are error-free. If you find errors, you can dispute them and request correction. The credit bureaus don’t share information about errors. You have to request correction from each credit bureau reporting the incorrect information.

Ask the credit bureaus to freeze your credit. Freezing your credit doesn’t affect your credit score. It just means no one can run a credit check on you. If you want to apply for credit, you can unfreeze your report right before you apply. Freezing is a great way to make sure identity thieves can’t open new accounts under your name because most new credit applications will fail if the creditor can’t run a credit check.  

8. Take the Pulse of Your Healthcare Accounts

Paying medical bills is a fact of life for most Americans. An important way to clean up your finances—that you might not know about—is by using a tax-advantaged healthcare account. 

If you have a flexible spending account (FSA) at work, it means you can set aside pre-tax money to pay for healthcare expenses. That could save you an amount of money equal to the taxes you would have paid. For example, if you are in the 25% tax bracket and you have $100 in income, you keep $75. But if you use the $100 tax-free for healthcare expenses, you get to spend the entire $100.

Most FSA accounts are “use it or lose it.” That means that whatever money is in the account after December 31 is gone. Schedule your healthcare spending at the beginning of the year if possible, so you don’t run the risk of leaving FSA money unspent. Qualified purchases include doctor co-pays, eyeglasses, contact lens solution, and pain relievers. The IRS explains eligible expenses here.

A health savings account (HSA) is another kind of tax-advantaged account for healthcare spending. These typically don’t expire at the end of the year, but you can only contribute to an HSA if you have a qualifying high-deductible health insurance plan. 

9. Update Financial Accounts and Documents

Whether it’s insurance coverage or legal matters like wills and trusts, it’s smart to review your financial documents annually. You may need to change amounts or names of beneficiaries. 

For example, if you’ve gotten married or divorced, you might want to change the names of beneficiaries on your life insurance, bank account, or other financial accounts. If your car insurance costs have gone up, call around to find out if you can get lower premiums. 

10. Tackle Your Debts

One of the best gifts you can give yourself is a debt-free future. Create a plan for paying off your debts. To reduce what you pay in interest charges, pay more than your minimum payments each month. If paying your minimums each month is too difficult to manage, you could explore other debt relief programs. 

Get Help Building Your Financial Future

Learning how to deal with debt, money, and planning for your future doesn’t have to be hard, and you shouldn’t have to do it alone. If you’re struggling with unpaid bills or overdue credit card debt, it might be time to get debt relief. Based on your situation, you might benefit from professional support like credit counseling. Or if your overdue debts have gotten too tough to manage, you might be a good fit for a professional debt settlement program that can help you get rid of debt faster and move on with your life.