Financial Spring Cleaning

The weather is turning warmer and we look forward to a beautiful spring.  But first, perhaps some “financial spring cleaning” would help you enjoy the summer a bit more.  While this task may not be the most exciting, it usually is rewarding in the end.  This spring, while you’re tidying up your home, consider getting a fresh-start with your finances as well.  This article includes three helpful ways to do a quick financial spruce-up.

Break Out the Highlighters

Spring is a great time to take a closer look at your budget and one way to do this is to go old-school.

Find your credit card statements from the past six months and a few highlighters.  Use one to highlight necessary expenses (monthly bills, groceries, tuition, etc.), another to highlight items bought because you really wanted them (Netflix subscription, a new TV, new kitchenware, etc.) and another to highlight less thought-out purchases (fast food, drinks at happy hour, Starbucks coffee, etc.).

This exercise proves to be eye-opening as to how much people are spending on stuff they really don’t need or really didn’t want that badly.

After highlighting each of these areas, consider setting up a budget spreadsheet or physical folders with separate categories and spending limits for each one.  For example, you can spend up to $100 on pet supplies, $300 on groceries, $100 on miscellaneous/entertainment and obviously however much your monthly necessary bills are (utilities, mortgage, etc.).  Keep track of spending records/receipts/ statements and throughout the month see if you are sticking to the budget or overspending in certain areas.  Then, come next spring, you will have a record of the year’s spending and can see how your spending has trended over time.  (As a bonus, it will also be extremely helpful in planning next year’s expenses!)

Make it Automatic         

If you haven’t made your savings contributions automatic, consider doing it now.  Utilizing this free and easy system may make your life simpler.  Having a deduction taken out of every paycheck for savings before you see it makes it easier to not spend and easier to accumulate a savings.

Another automatic system to take advantage of is changing your bills to auto-pay, if available.  As always, you should review your bills each month, but having some of them set up on auto-pay quickens the process and also ensures payments are on time.  To help avoid surprises, stick with only automating bills that are the same every month like insurance or rent.  Also important to keep in mind, is to not have all your auto-payments around the same day/pay-period.  Keeping them spread out will ensure you always are left with money for other important necessities and unexpected expenditures.

Go Paperless

You know that amazing feeling when you finally get rid of clothes you haven’t worn in two years?  Well, getting rid of that filing cabinet filled with old bills and credit card statements can feel just as freeing.  Consider both scanning your important documents into a folder on your desktop and going paperless with your statements going forward.  This will allow you to find them quickly, protects them from loss, and makes your home less cluttered.

Of course, do not just start tossing.  A general rule to go by is to hang onto tax records for seven years and if it is easier, just hold onto hard copies of those.  But everything else, including bank and credit card statements, pay stubs, could be scanned and stored in a cloud-based filing provider, such as Dropbox or Google Drive.

We’d be happy to help you think about expense management, realistic savings goals, record retention or any other financial matters in a no-charge, no-obligation initial meeting.  Just visit our website or give us a call at 970.419.8212 to learn more.

This article is for informational purposes only. This website does not provide tax or investment advice, nor is it an offer or solicitation of any kind to buy or sell any investment products.  Please consult your tax or investment advisor for specific advice.