It can be a bit tricky to refinance an auto loan when you work for yourself. Many Americans today are enjoying the benefits and freedom that self-employment can bring. The Pew Research Center reports about 16 million Americans work for themselves -- that’s 10% of all jobs held in…
After what seemed like an endless winter, spring has finally arrived. With it comes sunshine, warmer days, neighbors emerging from hibernation, and even the newfound motivation for “spring cleaning.”
For your family, spring cleaning might mean simply clearing out the garage or even reorganizing the whole house. But regardless of how many home projects you decide to tackle, auditing your finances should absolutely be one of them.
Here are a few places to start when you’re ready to financially declutter, and how often you should be doing it.
Most of us have a mail pile, usually in the kitchen or on our desks. This catch-all area is where everything important winds up, from bills and things to be filed to enticing coupons. While this pile is made with the best of intentions, it leads to visible clutter around your home (best case) or even results in missed payments (worst case).
The first step in spring cleaning your finances should be to physically declutter.
Decide what’s important to keep and what you should toss. You should be keeping things like receipts for large items, warranty information, tax documents, card agreements, and the like, though these should be kept safe in a filing cabinet.
Then, prevent the clutter from happening again. Pay bills as soon as they arrive or, better yet, set up auto-pay for all of your accounts. Go digital with bank and credit card statements, and file or shred mail with personal information the same day it’s received.
Eliminate Unnecessary Spending
One of the easiest — yet most impactful — things you can do for your finances is to identify wasteful spending. What is defined as “unnecessary” will vary from person-to-person, of course, but you’re almost guaranteed to find somewhere in your monthly spending that you can cut back.
You’ll want to audit your accounts, looking for any subscriptions or recurring charges you may be paying on a regular basis. This could include streaming music or movie services, an unused gym membership, or even cell phone insurance coverage that you meant to cancel long ago. If you don’t use the service enough, or could get the same thing for a lower price, look into changing your subscription.
Cleaning up your spending also means analyzing monthly bills. Could you reduce your cell phone plan to save money? Cancel cable service in favor of “cutting the cord?” Raise your insurance deductible to save money on premiums? Try them all. Also try calling providers to see what promotions are available and if there are any discounts for existing customers. It never hurts to try!
Going through your monthly expenses line-by-line should become a regular practice. However, making it a part of your spring cleaning this year is a great place to start.
Tidy Up the Budget
Want to truly transform your financial situation? Then find ways to spend less, keep more of what you earn, and ensure that you are meeting your financial goals.
All of that starts with your budget.
A strong budget (that you actually abide by) can make or break the bank. Saying, “I will start spending less on groceries” rarely works — instead, you need defined goals such as, “Last month I spent $1,000 on groceries; this month, I will spend no more than $850.”
Sit down to develop a specific financial plan that accounts for your monthly expenses, savings goals, and even fun money. Then, work hard to stick to that budget by any means possible.
Some people use the envelope method to stay on budget, especially if they’re new to the concept. Others use mobile apps, such as Mint, to see where their money is going and track their progress.
No matter how you stay on top of your budget, the goal is to establish one and keep your commitment to it.
Organize Your Goals
There’s something to be said for simplicity and organization — but that feeling applies to your finances as much as it does to your linen closet.
This spring, take some time to organize your financial goals; this will help you to stay on track and visualize your progress, the same way that an organized garage makes it easy to find your tools.
This includes analyzing your:
- Retirement plans and monthly contributions to those accounts
- Big future purchases (like a new home or a car) and whether you’re adequately preparing for them
- Current debt status and how/when you plan to pay those balances off
- Children’s education savings and whether you’re utilizing the right savings vehicles for those
If you want to set aside six months’ worth of expenses in the next year, how much does that mean you need to save from each paycheck? Are you on track to meet that goal?
Spring cleaning was a thing long before Marie Kondo ever came into the picture. However, her signature catchphrase — urging clients to toss anything that doesn’t spark joy — is an excellent way to approach your finances.
Of course, not every expense will spark joy; for instance, I don’t think anyone enjoys forking over property taxes or paying the electric bill in the middle of summer. However, most everything else in your life can be analyzed to determine whether it’s “worth” keeping around.
Ask yourself questions like:
- Do I truly love my home or am I overpaying for more space than we need?
- Does my pricey car make me happy, or would I be happier in something more affordable (putting the savings toward one of my goals)?
- Will this new shirt/television/appliance/etc. add joy to my life or simply give me a momentary high?
- Do I really want to go out with a group this weekend and spend a lot of money on dinner and drinks, or would I be just as happy curled up on the couch with a movie?
By inspecting each purchase you make — asking yourself whether it sparks joy and actually makes you happy — you can save yourself from both clutter and overspending. Then, you’ll have more funds available for the things that truly please your soul… like a family beach vacation or retiring a little early.
Spring is a time of renewal for all. This year, use it as the perfect opportunity to clean up your finances and your home.