Financial Spring Cleaning: 6 Tips to Get Your Finances in Shape for Summer
Spring cleaning can freshen up your home and eliminate all the dust or damage that winter brings to its physical appearance. Similarly, financial spring cleaning removes all the built-up grime that has hurt your ability to be financially healthy. It’s a great time to adjust how you spend, save, and invest your money to get your finances back on track and prepared for the rest of your life.
Here are some tips to help you get your finances in shape before summer hits:
Adjust Your Budget
This is an excellent time of the year to access your budget and see how you’re performing. Are you finding that you struggle to hit your goals every month or that you’re constantly living paycheck-to-paycheck? These might be signs that your current budget isn’t working for you. It can be a good time to assess how you’re doing and whether you need to adjust or reign in your spending.
Often, a budget isn’t being followed because consumers are just bad at being disciplined in their spending habits. However, sometimes your budget doesn’t work for your income. You might be allocating too much money to monthly spending, such as clothes or eating out. You may want to adjust some of your “want” categories to ensure you have enough money to pay your bills first.
Now can be a great time to adjust your budget for the summer months. This is because you will likely have different expenses during the summer than you do the rest of the year, but you still want to ensure you live by your budget. This is especially true if you are planning a summer vacation or if you have kids who are out of school for a few months.
Review Your Credit Accounts
It can be easy to lose sight of what is happening on your credit report. This can be the perfect time of the year to check in on your credit accounts and ensure you’re in good standing with all of them. Regularly checking your credit report is a best practice to make sure that your identity hasn’t been compromised and that you don’t have any accounts opened in your name that aren’t yours.
It’s also a good idea to look over your credit statements and make sure that all of your credit accounts only reflect purchases that you’ve made. It can be more common than you think to find purchases on a credit card, for example, that aren’t yours but that you’re paying interest on. It’s important to regularly check these accounts to make sure that doesn’t happen.
Cancel Unused Subscriptions
With the evolution of software as a service (SaaS) companies, especially in the streaming space, you likely have many monthly subscriptions you’re paying for. It’s easy to sign up for a new subscription to receive something now and then forget to cancel later when you no longer use the service consistently. You may also try out a subscription service during a free trial period and then forget to cancel, even though you’re not using it anymore.
Now is as good of a time to go through your subscriptions and determine what you’re using, what you didn’t know you were paying for, and what you can live without. Anything that falls into these categories is a great candidate to cancel so that you can save money. What you pay in subscriptions can quickly add up and cost you more than you think from your budget.
Increase Your Emergency Fund
As you adjust your budget, you may want to increase the amount of money you’re saving in an emergency fund. Inflation has grown exponentially over the past few years, so you’ll want to ensure that your current emergency fund will still get you through for as many months as you expected when you started saving.
Experts believe you should keep three to six months of expenses saved in an emergency fund. Even if you feel comfortable putting that amount away, you should save an additional three to six months to be on the safe side. You can always take part of this money and invest it to help build your wealth faster.
Make a Plan to Pay Off Debt
If you find yourself still owing large amounts of debt or in a place where you’re not getting any closer to paying off your debt, then it might be time to create a specific plan to help. You should evaluate your total debt and make a plan on how you’re going to get it all paid off.
Prioritizing this can benefit your financial situation as you’ll have more money available for investments or savings. Getting out of debt can be great for your mental health and won’t be hanging over you any longer. Your plan should include how much you will pay on the debt each month and when you expect to pay it off.
Reevaluate Your Financial Goals
Now that you know where your finances stand, it’s important to see if your long-term financial goals are still realistic and achievable. If your current goals seem too far-fetched, you might want to break them down and try to find more short-term goals to help you reach the longer-term goals.
As you reevaluate your goals, consider whether you’ve had significant changes over the past several months or years since you set the goals. This could put your financial goals out of date, and it could be a leading cause of you not reaching your expected destination. You need to set realistic goals that can be achieved within your current budget and lifestyle.
Spring is a great time to clean up your home, yard, and finances. By evaluating how your current finances are compared to your expectations, you can be honest with yourself about where you need to go and what you need to do to get there. Regular cleaning up of your finances can make all the difference in a happy life.