Spring is here and time is flying by. It is a good time to clean up your finances and plan towards your goals from the beginning of the year.
Here are some tips to get ahead on spring cleaning your finances:
1. Review your goals. Spring is the perfect time to revisit your financial goals at the beginning of the year. Reflect on what you’ve accomplished so far and what adjustments might be needed. You may have made progress on paying off debt but need to ramp up your savings efforts. It’s ok to change your goals because life happens. Whatever the case, take the time to reassess and realign your goals for the rest of the year.
2. Evaluate your budget. Your budget serves as a plan for your financial journey, guiding your spending habits and priorities. Take a close look at your expenses to identify areas where you can cut back or reallocate funds. With the rising cost of living, you may need to adjust certain categories such as groceries or utilities. If you have extra money in your budget it can be redirected toward your financial goals, whether it’s building an emergency fund or chipping away at debt.
3. Check your credit report. It is good to review your credit report at least once a year. It’s a snapshot of how well you pay your bills on time. Go to annualcreditreport.com to obtain your one report for free from each credit bureau. Dispute anything that doesn’t belong on the report. Your credit report shows all creditors you have signed up for credit cards, car loans, mortgages, and student loans. Your credit history is crucial to your financial well-being, affecting your ability to secure loans and favorable interest rates.
4. Update Beneficiaries Ensure all your financial accounts such as bank accounts, retirement plans, investment accounts, and life insurance have updated beneficiaries. Add a primary and secondary designation on all your accounts. You want to make sure your loved ones have access to the money. Reviewing and updating this information regularly ensures that your assets are distributed according to your wishes in the event of your passing.
5. Save for Emergencies– Building an emergency fund helps with peace of mind if you have a medical emergency or a job loss. Aim to put aside 3 to 6 months of living expenses in a high-yield savings account. This fund will help you from adding extra debt.
6. Set up sinking funds. Anticipate future expenses by reviewing the calendar for the rest of the year. What do you want to spend money on? You can save for future expenses such as Christmas, vacations, back to school, and car or home repairs to name a few. Decide what goals you want to save for and how much. Put a plan together to save the expenses that are important to you. Open a high-yield savings account and send up automatic transfers into your accounts.
7. Make a Debt payoff plan– Debt can be a big burden on your financial journey. Develop a plan to pay off your debt by making a list of all your outstanding debts including balance and interest rates. Decide on which payment method you want to use whether it’s the debt snowball method (paying off the smallest debts first) or the avalanche method (tackling high-interest debts). Pick the debt pay-off strategy that will work best for you and your goals.
8. Increase your 401k Contributions. Investing for the future is important on your financial journey and it will be here before you know it. The earlier you start the better. Review your employer contributions such as a 401K or 403B and consider increasing it by 1% or more. Thanks to the power of compounding, every additional percentage point adds up over time. Increasing your retirement contributions will make an impact over time. Review your investment options within the plan to ensure they align with your long-term financial goals and risk tolerance.
9. Review subscriptions and memberships– It’s so easy to accumulate so many memberships with free trials. Take an audit of all your memberships and subscriptions. You can always cancel Netflix and wait until your shows come back on to watch it. Cancel gym memberships and other subscriptions that you have. Canceling unused or unnecessary services can free up extra funds in your budget for something else.
10. Plan for summer fun– With summer just around the corner, now’s the time to budget for seasonal activities and adventures. Whether it’s a family vacation, outdoor concerts, weekend getaways, or dining out with friends, set aside funds specifically for these occasions. Planning ensures you can enjoy the warmer months without derailing your financial goals.
Remember spring is a great time to refocus on your financial goals. Achieving your financial goals is a journey. Take one step at a time. Small steps can make a lot of impact over time. Stay committed and celebrate your progress along the way.
What tip will you be working on first?