Spring is an ideal time to clean up your finances, clear out the clutter, and get a fresh start. Maybe you have more money left over at the end of the month and could use an investment update. Perhaps you have too many expenses in automatic, or it’s time to apply the brakes to your credit card spending and can use a budget tweak. Whatever the reason may be, consider the following seven suggestions to get a better handle on your finances this spring season.
1. Review Your Spending
Whether you call it a budget or a spending plan, you only need to look in the rearview mirror over the past few months and write down your recurring bills and expenses. When you inventory those expenses, categorize them according to Needs, Wants and Wishes, with Needs being expenses you must meet to keep a roof over your head and food in your belly and Wishes being rather nice to have, but you could live without. Is there a way to eliminate or reduce drastically your Wish list. For example, that $5 daily mochaccino latte or $70 cable bill is a great candidate for your first cut. Try less expensive coffee drinks and streaming services.
2. Put Your Savings on Autopilot
That 50 to 100 bucks a month you recouped by disconnecting your cable service and brewing your daily coffee at home can now be redirected automatically to your emergency fund. If you don’t have an emergency fund to cover at least six months' expenses, you could literally be one or two paychecks away from disaster.
3. Review Your Tax Withholding
If you’re looking forward to that big tax refund this year, it's time to make a change. What you have actually done is given the U.S. Government a 12-month interest-free loan. Instead, give it to yourself as a monthly upfront paycheck increase. Adjust your withholding for a better balance and slide that extra money into savings or a 401k increase.
4. Inventory Your Material Wealth
Dedicate an hour or two to photographing and cataloging your household possessions. Incase of a fire or loss you will have an account of your belonging. Concentrate on big-ticket items like your furniture and expensive electronics. Write out the approximate amount you paid and when you purchased the piece. As you bring new items into your home, save the receipts and update your inventory.
5. Check Into Your Renter or Homeowner Insurance
Your spring cleaning should include a complete insurance check-up. Go to your insurance files and this time really read the fine print. Is your coverage adequate to replace everything you inventoried after you followed suggestion #4 above? If you own your home, you probably know that replacement costs have risen everywhere. Make sure you're covered.
Also, it wouldn’t hurt to check and possibly upgrade your life insurance, especially if your family has grown or your income has gone up.
6. Plug Into Technology
Let the free and secure technology of your online banking platform keep you organized. Most banking sites have the settings you need to do what you wouldn’t do for yourself. Want to receive a warning when your account balance gets too low or your credit card spending is over a set amount? Your bank can do that via email or text message.
7. Get Your Paper Files in Order
For the financial papers you must keep, devise an orderly filing system. If you’re after a more simplistic method, head to your office supply store and buy an expandable folder with month separator tabs. Stash the papers you usually throw away each month in the appropriate month of the folder.
Finally, remember that bad financial habits come from neglect and passive spending decisions. Spring is the ideal time to get back in the driver’s seat and reacquire the big picture. Clear out the clutter and do away with what is not working for you.