While many are organizing their closets and cleaning out drawers and garages, use springtime to Spring clean your finances. Now is a great time to look at your finances so you can work toward financial independence. Here are ten ways to help you clean up your finances by cleaning out what isn’t working in your financial situation.
Your monthly budget may help you work toward your financial goals and can be revised as your expenses change so you can track your spending. However, your budget shouldn’t be so restrictive that it doesn’t bring you joy; remember to budget for things you desire too!
Take inventory of your debts this spring, so you understand how much you owe. Write down each account, the unpaid balance, and the monthly payment required. Don’t forget to include overdue small bills, as any unpaid debt obligation can hinder your finances. Once you have your debt inventory, consider using one of these debt reduction strategies:
Spring is a great time to schedule an annual investment strategy review or update your financial plan. If it’s been more than a year, reach out to your financial professional to get your review on the calendar and let them know it is time to spring clean your finances.
Increasing or maximizing your pre-tax and after-tax retirement savings contributions helps in two ways. First, it helps you accumulate more retirement savings over time. Second, contributions into pre-tax retirement savings accounts help to lower your taxable income in the year the contributions are made.
An emergency fund is an account used during financial stress to help improve economic security. An emergency fund differs from a savings fund because it provides cash for emergencies, whereas a savings fund is a nest egg for a specific purpose, If you haven’t set up an emergency fund, you should do so this spring. If you have an emergency fund, increase your monthly contribution to save 6-12 months of expenses.
It’s important to check your credit report at least once per year to check for inaccurate information or accounts that may not be yours. Your credit report impacts how much you will pay to borrow or for renewals on contracts such as car insurance. Federal law allows you to access your credit report from a credit reporting agency once per year at no cost.
Enrolling in electronic delivery of your statements and bills helps reduce clutter and paper waste while providing secured access to your account information.
Mobile apps help you stay connected to your accounts to monitor your spending and savings. Many banking apps provide budgeting features that categorize your spending and can inform you of your budget progress. Alert features can also inform you about charges and debits to help ensure it was you versus account fraud.
Automatic bill payments help ensure that you are never late or forget to pay a bill, which can cost you more money. If you haven’t signed up for automatic bill payments for utilities, etc., consider signing up this spring.
Consider closing accounts you rarely use since you may forget about them or risk losing the card. Credit card companies often close accounts that are not used as a security measure. Take these ten steps to begin to spring clean your finances.
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At Money Bridge Wealth & Income Planning we work with clients of all ages to plan for a successful financial future. We help clients gain financial peace of mind regardless of stock market and economic volatility. Whether you’re entering retirement or just planning for it, we can help you on every step down your financial path. Contact us today to get started.