How do you feel when you think about your current financial situation? Do you tend to put your head in the sand? Or maybe you’re on the other end of the spectrum, and you anxiously look at your account balances every day?
No matter what, it’s always good to spend some dedicated time with your money: It’s time to spring clean your finances!
These 3 simple steps can help you feel more in control of your money. They’ll help you better understand what you have, where it’s going, and what you want it to do for you!
Consider it a spring cleaning of your financial house, if you will, to make sure everything is in order and you’re focusing your energy on the right stuff!
Each year, we walk through these steps with our clients so we can track progress, set goals, and follow through on actionable items to move them in the right direction.
🌎 If you want to plan a sabbatical in the future, this is a great place to start!
Understanding your current financial situation is key.
“Financial planning for a sabbatical is more than just saving for the time you won’t be working. A high quality financial plan will allow you to enjoy your time away and know that your longer term goals will still stay on track. Understanding the different aspects of your finances will give you a valuable head start!”
Table of Contents
Make sure to save this post for later! 📌 You can go back to it every year!
3 SIMPLE STEPS TO SPRING CLEAN YOUR FINANCES:
Step 1: Calculate your net worth
- Approximate time: Beginning of the Year (January or now if we’re past January)
- Best moment to do it: Each year, as you receive your year-end account statements
- What you need on-hand: List of total account balances and list of debts
Just like your smartphone or watch can track your overall health based on stats (how many calories you burn, how many steps you take, how much you sleep each night, etc), there are ways to track your overall financial health too.
How? Update your net worth statement annually. The goal here is for your net worth to increase year-over-year.
➡️ Gather all your December 31st account statements and compile them into one place. Then track one year to the next to see trends and highlight where you want to focus your attention for the next 12 months.
Need some ideas on how to get started? Check out this article on Investopedia.
✅ Some benefits of calculating your net worth:
- Know what type of accounts you have (bank accounts, retirement accounts, lines of credit, etc) and how they’re registered (i.e. whose name they’re in)
- Get a quantifiable way to measure your overall financial health – the more positive your net worth, the healthier you are financially
- Keep track of where all your accounts are and how to access them so you don’t end up with a bunch of “orphan” accounts
How does calculating your net worth support your future sabbatical? 🌴
Calculating your net worth is a powerful first step in planning a future sabbatical because it gives you a clear, big-picture view of where you stand financially.
When you know what you own, what you owe, and how that changes over time, you can make more informed decisions about when to take a break, how long you can afford to be away, and what adjustments, if any, you need to make to stay on track for your long-term goals. It’s your financial foundation, and understanding it helps you plan a sabbatical with confidence rather than guesswork.
Step 2: Review your tax return
- Approximate time: Spring time (March – May)
- Best moment to do it: After you’ve filed your tax return for the previous year
- What you need on-hand: Your completed 1040, and related tax forms and documentation you used to file it
Did you know that your tax return is full of important information that can help you be more strategic about the year ahead?
Most people forget about their tax return as soon as tax season is over, checking it off the to-do list and thinking they won’t need to worry about it for another year.
✅ But looking at your prior year’s tax information can bring the following benefits:
- Understand where your income is coming from and how it’s taxed
- Confirm that everything was recorded correctly. Filing an amended return may be a pain, but it could save you money or clarify what information you need to give to your CPA next year!
- See where you are falling in your current tax bracket & how to manage your taxable income going forward
- Know where you stand relative to income limits for tax credit and or deductions, or which savings strategies you are eligible for
- Know which receipts to hold on to in future years (invoices from big purchases or home updates, donations to charitable organizations, business or school-related expenses, medical-related expenses)
- Know how much tax you paid, and whether you should review your tax withholding elections or make estimated tax payments throughout the year
🔗 How to review your tax return? We’ve detailed exactly how to do it in this post!
🔗 Made a mistake on your tax return? You might want to consider amending a return. Check out the 8 common tax mistakes to avoid.
How does reviewing your tax return support your sabbatical? 🛤️
Reviewing your tax return supports your sabbatical planning by helping you identify opportunities to optimize your income and reduce your tax liability, both before and during your time away.
For example, understanding your current tax bracket can help you decide when to realize income, whether to make pre-tax or Roth contributions to retirement accounts, and whether to adjust your withholdings or make estimated payments in a sabbatical year.
It also highlights eligibility for credits or deductions that may be impacted by a change in income. Ultimately, it gives you the information you need to make strategic financial decisions that align with your sabbatical goals and support a smoother, more confident transition.
Step 3: Set 1-3 SMART goals
- Approximate time: Spring – Summer (March-August)
- Best moment to do it: When you’re ready to get serious about making your money work for you, rather than the other way around
- What you need on-hand: A way to take notes, your calendar to set a reminder to check-in, your favorite beverage of choice
Now that you have an updated picture of your current financial situation, it’s time to plan for the remainder of the year!
➡️ Write down 1 to 3 SMART goals that you want to achieve before December 31st to move your financial goals forward this year.
✅ SMART goals are:
- Specific
- Measurable
- Achievable
- Relevant
- Time-bound
An example of a SMART goal for your finances would be:
→ Increase your pre-tax contribution rate to your 401k by 1% each quarter so you make the maximum annual contribution by year-end
→ Set aside $1000 each month through the end of the year to fund next year’s big international vacation
→ Save $500 each paycheck so you can make the maximum contribution to your HSA by the tax filing deadline
Additional tip:
- Don’t overwhelm yourself with too many goals! It’s better to only have 1 goal to focus on and achieve it than to have 5 goals and fail.
- Stay accountable to your goals! Set reminders on your calendar for the tasks you need to do and remember to do regular check-ins.
- Choose a fun reward! Make this experience pleasant for yourself! Maybe you decide to take yourself out every time you reach a milestone.
How does setting SMART goals support your sabbatical? ⛰️
Setting 1–3 SMART financial goals helps you build real momentum toward your sabbatical by turning your vision into actionable steps.
Whether it’s saving a specific amount, reducing debt, or adjusting contributions to key accounts, these goals break down the big picture into achievable milestones. They keep you focused, track your progress, and ensure that each financial decision you make supports your plan to take time off.
So when the moment comes, you’re not just dreaming about a sabbatical, you’re ready for it.
That’s it! Congratulations!
You’ve just taken the first steps to spring clean your finances and take control of your money! This yearly practice helps you stay grounded in your financial reality: where your money is coming from, where it’s going, and how to use it more intentionally.
More importantly, it’s how you start turning big dreams, like taking a sabbatical, into something real and doable. With a clearer picture of your finances, a smarter tax strategy, and focused goals, you’re building a strong foundation for the life you actually want to live.
Here’s to financial clarity and bold adventures ahead! 🌿
Want to go deeper? Here’s how to plan your first money date!
Here at Middleton & Company, we believe that being in control of your financial situation can help open the doors to more options in your life! Do you desire to take a career break and fly across the world? Let’s start with understanding what you have and where it’s going. Now that’s empowering!
Understanding your current financial situation
is a tool to embrace your wildest dreams.
Do you feel like you’re stuck where you are because of money? Maybe you feel like it’s controlling you, rather than you controlling it? If so, let’s talk! We view money as a tool to support your dream life. Not the other way around!
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taylor anderson
Taylor is a Certified Financial Planner (CFP®) with a knack for making complex concepts simple and visual. After taking a two-and-a-half-year sabbatical to join the Peace Corps and travel Southeast Asia, she now satisfies her travel itch by exploring the Northwest in her Sprinter van with her two boys. When she's not helping clients with financial planning, you'll find her backcountry skiing with her husband and Australian Shepherd.