Spring is a wonderful time to take an objective look not only at your home’s cleanliness but at the tidiness of your personal finances, too. You can spring clean your budget by reviewing your income, savings, and debt, and adjusting as needed. Organizing your finances at this time each year will provide you with clearer goals for the rest of the year as well as make your summer a little more worry-free.
Tips for Financial Spring Cleaning
A spring cleaning of your finances does not have to be difficult. These tips will get you started. First, review your payday, banking, and billing statements. Write down your monthly income and debt. Next, determine how much you set aside in savings and how much you spend on discretionary items each month. Evaluate the data and see what changes need to be made to remain aligned with your financial goals.
Check In
It’s a great idea before you get started to take a look back at the past year. Some questions to consider:
- What were your biggest financial successes and challenges last year?
- If you could change one thing about your finances, what would it be?
- How much are you spending on your top three discretionary expenses?
- What would it make sense to spend less on? How about more?
Review Your Budget
Creating and maintaining a budget is the next step in your spring cleaning. Once you’ve reviewed your income and debt, create or adjust your budget. Be sure to account for any planned expenses for summer or fall activities so that you can remain on track with your goals.
If your budget doesn’t seem to be working after a few months, start a new one that is more in line with your current financial situation. Remember to include setting aside money for savings or an emergency fund, says CNBC.
Seek Money-Saving Alternatives
When reviewing your budget keep an eye out for items that are considered discretionary because they are more of a want than a necessity. Chances are you might be able to find a less expensive alternative. These types of items may include app subscription services, mobile phone services and more.
For example, taking a $100 cable bill and swapping it for a less expensive streaming service can save money, according to Linkedin.com. Another idea is to re-evaluate your auto or home insurance to see if bundling them with your current or another insurer will save you money, says Bankrate. Changes such as these may free up some additional funds to build your emergency fund or to pay down debt.
Make Savings a Priority
Making smarter choices with your budget gives you more opportunity to save money. Prioritizing saving will allow you to reach your financial goals as well as have money to set aside for the unexpected. You will also gain some peace of mind that you are on the right track.
Saving money using today’s banking technologies is easy. You can automate your savings by having a portion of your pay check sent directly to your savings account via payroll deductions and direct deposit, according to Bankrate.com. You can also set up automatic transfers through your financial institution’s online banking platform, saving you time and giving you peace of mind.
Tackle Debt, Too
While you are cleaning up your finances be sure you include a plan to pay off any high interest debt. Your budget review will allow you to identify all your loans, credit cards and other debt. Since debt is actively costing you money, now is a great time to create a strategy to pay it off, especially if you are paying high interest rates.
There are a few different ways to pay off debt and they all depend on your financial situation. One approach is to focus on paying down debt accounts with the highest interest rates first while continuing to pay the minimum on the rest of your debt accounts, says CNBC. This strategy allows you to save money on interest.
Alternatively, you could pay off debt with the lowest balances first (known as a debt-snowball). Once they are paid off, apply those payment amounts to your higher debt balances.
A third option would be to consolidate your debt into a single loan with a fixed interest rate. This can be done with a personal loan, a home equity loan or even a new credit card with a special introductory rate offer that is a lower rate than your current debt, according to Bankrate.
TCU Can Help
Travis Credit Union knows how important financial wellness is to our members’ success. We can help you learn how to plan, save, spend, and borrow better. We can teach you how to set up a budget, use direct deposit to save money, how to build your credit so you can get the best interest rates on loans and much more. Visit traviscu.org to get started.