How To Spring Clean Your Finances
The spring season is almost upon us, which means it will be time for some spring cleaning. However, while many will focus on cleaning their homes, you should be really focusing on your finances. There are many things that you will have to do to maintain your cash flow and other financial related responsibilities.
Spring is also an ideal time to consider getting organized, simplifying your budgeting and savings process, and setting yourself up for financial success in the coming months. We’re going to share with you some tips and tricks to help you “Spring Clean” your finances and get ready to have some fun this Summer!
Here’s some advice on how to spring clean your finances:
The first thing you should tackle is either creating a budget (if you don’t already have one) or updating and reviewing your current household budget. You can’t handle your finances properly unless you know “how much money is coming in,” “how much money is going out,” and exactly “where” that money is going every month.
A lot of your financial responsibilities will revolve around your budget. Your budget is incredibly important because it determines how much money you are taking in and how much money is going out to bills, loans, and other needs. Whatever you chose to call it, you need something to keep track of all of your transactions.
Having a budget is especially important because it will expose certain areas that you can either cut back or place more. For example, if you see that you are spending excess money on subscriptions that you don’t really use, you can utilize the remainder for other areas such as groceries or paying back substantial credit card debt. Adjusting your budget accordingly is just as important as having a budget to begin with.
One of the most important things you can do while Spring Cleaning is to organize! Create an “I.C.E.” folder (In Case of Emergency) that will have ALL of your most important financial information and copies of vital documents. This is a great idea especially if you are the main person that handles the household finances. In the “I.C.E.” folder, you should include items such as your account numbers, usernames and passwords, a complete list of bills that you pay each month, investment and retirement fund account info, and anything else that would need to be handled in your absence.
Don’t just make automatic bill payments, make everything automatic! If you haven’t made your savings contributions automatic by now, you’re a little behind the curve. See if your paycheck can automatically be deposited into your checking account. If you have the ability to split up your direct deposit, then take full advantage of that and put some money into a savings account as well as your checking account. To help avoid “account-draining” surprises, stick with automating only recurring payments that are the same every month, like your mortgage or car payment.
Go Paperless –
Papers, folders, binders, filing cabinets, huge piles of credit card statements and bills, envelopes, etc. It’s time to clean up the mess and go paperless! Getting rid of that filing cabinet filled with old bills and statements can feel amazing. Scan your important documents if you can’t already access them online. It will make finding them so much easier too. Use free “Cloud” storage such as Dropbox or Google Drive. This is where the I.C.E. folder will come in handy because as things become more and more electronic and transactions take place online, it can be difficult to access accounts or handle your finances when you’re gone. If your loved ones can’t login to your online accounts, then it becomes almost impossible for them to do anything. Having that I.C.E. folder with login information and passwords becomes imperative.
It’s a great time to consolidate your accounts, get rid of unused accounts that no longer serve a purpose, and toss ALL of those old checks and bank statements. If you have multiple bank accounts or savings accounts open that you rarely use, consider consolidating and then closing them. If you’ve been unhappy with your bank, now is a great time to switch banks. Check out your retirement accounts because some people have at least one retirement account from an old employer that’s just sitting there. Instead of dealing with multiple retirement accounts, consider rolling old accounts into a new one to streamline your savings.
Tax Withholding –
If you are receiving a large tax return this year you may be celebrating, but a big return can sometimes mean that you gave the Government an interest-free loan all year that came right out of your paychecks. When you’re setting up your tax withholding, your goal should be to attain a nice balance. Try to get as much money as possible in each of your paychecks without owing the IRS money when you file your taxes. It’s a good idea to adjust your withholding as needed to achieve this goal.
Go Rate Shopping –
Now is the perfect time to shop around for savings with things like homeowners’ insurance, car insurance, etc. If it’s been a while since you shopped around for better rates on your life insurance, cable bill, cell phone plan, or other monthly recurring things, then now is the time. You should be looking around for better rates at least once a year, but preferably twice a year, to ensure that you are not overpaying for these services. It’s completely free to get quotes from different companies to compare with what you’re paying now.
Over the course of a year, it can be very easy to lose track of your insurance coverage, but you should be asking when the last time you reviewed life insurance or homeowners’ insurance policies. You should be pulling policy documents to ensure that you have sizable coverage.
You also need to make adaptations if there are major life events taking place in your life. These major occurrences include substantial raises in your job or having a recent child. You may need to upgrade your insurance if anything of significance took place.
Get Out Of Debt –
Spring is all about renewal and starting over fresh. Why not tackle your debt to start down the path to financial freedom? There is no better time than now to face your debt head on! Start with a free credit counseling session to see exactly where you stand with your personal finances. Get your “financial picture” so you can properly assess the situation, and make the best decisions for you and your family. It’s completely free, confidential, secure, and easy to get started. Give us a call at 1-866-699-2227 or visit us online at www.advantageccs.org for free online credit counseling
Get Rid Of Poor Spending Habits –
Knowing when to save and spend money is crucial because it can greatly affect your budget. There is no greater season to freshen up your spending habits and get rid of bad ones. One of the most common spending pitfalls that people fall into, especially with the changing of the seasons, is impulsive shopping. This means you may be idly passing by a product or a service and purchase it if you see it discounted even though you may not necessarily need it in the long-term. This is also very common in shopping malls.
You should be taking countless time to evaluate your spending habits and identify patterns that are putting less money in your pocket. In addition, you can also use this as a time to make adjustments in your daily life that can change your financial situation. If you see yourself eating out in restaurants too often, simply cook at home more. Or, if you find yourself in significant credit card debt, use alternative methods to pay for certain items you need. If you are stuck in this debt, odds are your spending habits are not ideal, to begin with.
Catch Up On Late Payments –
If there is one thing that you do NOT want to make a consistent habit, it is making late payments. If you are behind, now is the time for you to catch up. Work out a plan to have any debts paid off in a reasonable amount of time. If you are in immediate need for cash, you may want to be creative and think of ways for you to obtain these funds such as a yard sale. You may also want to consider a spending fast so that you still have some left over money.
Check Your Credit Score –
You need to be heavily on top of your credit score because this is what a lot of lenders and banks will look at to determine your credit worthiness. More specifically, keep an eye on the factors that contribute to score fluctuations. You can visit www.annualcreditreport.com once a year for a free credit report.
When it comes to spring cleaning, you probably haul the garbage out of your garage or attic, tidy up the basement, scrub your fridge inside and out, clean the rugs or carpets, and wash the curtains. But don’t forget about your personal finances! Just after tax season is the perfect time to perform an annual evaluation of your finances, work on your household budget, check out your bank accounts, eliminate debts, and look at your investments. Hopefully, these tips and tricks will help you out when you’re getting everything organized and all cleaned up!