As we welcome in the Spring and admire the warmth and beauty this season brings, remnants of the Winter still linger, making spring cleaning an absolute must. Spring cleaning can be a daunting but necessary task. The outcome is an organized, decluttered, and clean home and yard. However, achieving this result can be a grueling and time-consuming process. Let me spring this on you (yes, pun intended😊), spring cleaning is not just necessary for your home and yard, it is essential for your finances. While you are embarking on a deep cleaning and organization spree, it is the perfect time to declutter and organize your financial records, deep clean your debt, spruce up your finances, and much more. Dedicating this time to focusing on your finances will benefit your bottom line and overall financial satisfaction. Let’s explore 6 transformational steps to enhance your financial health.
- Declutter and Organize Your Financial Records
As you tidy up your living space, take the time to sort through your financial records. Gather all your financial documents: bank statements, investment statements, tax returns, medical records, last will and testament, power of attorney, insurance policies, etc.. Shred outdated documents and organize the remaining documents in a systematic way. Create digital backups and then store them in a fireproof safe, protecting them from loss or damage. Discuss each document and your wishes with the relevant members of your family and make sure they can access the documents when needed. Consider sharing sign-in credentials to important websites with your spouse or another trusted person.
- Review Your Financial Records and Update Beneficiaries
As you freshen up the paint on your walls and baseboards, take a fresh look at your financial documents to ensure the beneficiaries reflect your current wishes. Review the beneficiaries listed on your life insurance policies, retirement accounts, and other relevant documents. Your beneficiary can be a person or entity, including nonprofit organizations and charities.. Make any necessary changes and communicate those changes to the appropriate agencies and individuals. This process can at times feel morbid, but this action ensures your wishes are carried out and your loved ones and community are taken care of.
- Revisit, Review and Revise Your Budget
As you are rearranging your furniture, take time to revisit, review and revise your budget. Spring is an excellent time for this exercise. It is also a suitable time to create a budget/financial plan if you have not prepared one. According to a study by CreditDonkey, only 32% of U.S. households prepare a monthly budget. However, budgeting is one of the most effective ways to keep track of and manage your finances. As we see unprecedented increases in the cost of food, utility bills, consumer products and services, this exercise becomes more crucial to ensuring you are prepared for the unknowns that a recession brings. Your budget should reflect your actual income and spending as closely as possible. When reviewing your budget, compare your actual income and expenses to your budgeted income and expenses. Identify the budget busters impacting your ability to stay on target, save and invest more. Make any necessary adjustments to your spending and explore opportunities to create additional revenue streams, if necessary. This is also a suitable time to call and renegotiate rates for all of your bills: insurance, utilities, interest rates, internet, cable, etc.. Cancel all unused subscriptions and memberships (that streaming service and gym membership you have not used since the beginning of the year). If your review reveals that you are on track, stop and celebrate your success, keep up the excellent work and push yourself a little harder. If you have fallen off track, dust yourself off and get back on the budget horse. Finally, if you are in the passenger seat of your financial destiny, take control by creating a plan that will put you back in the driver seat. Strive for a plan that will give you a satisfying balance between saving, investing, and enjoying your money responsibly.
- Assess, Refine or Establish Your Financial Goals
As you experience the sense of renewal and growth springtime brings, take the time to assess and refine your financial goals. Are you on track to achieving the financial goals you established when you created your vision board and budget for the year? Did you plan to pay off debt, start that new business, purchase a home, build your emergency savings and your nest egg? Are you experiencing the financial satisfaction you deserve and desire? If not, you may need to adjust or start over. If you did not establish goals for this year, take the time to envision how life would look if you were living a financially satisfied life. Set clear, documented SMART (specific, measurable, achievable, time based) goals. Break them down into manageable milestones and establish a timeline for their attainment. Tracking your progress frequently will help you stay motivated and make necessary adjustments along the way.
- Deep Clean Your Debt
As you deep clean and sanitize your home, take the time to clean up your debt. Just like clutter and filth can weigh you down in your living space, debt can hinder your financial progress. Evaluate your outstanding debts, including credit cards, loans, and mortgages. Utilizing the debt snowball method, make the largest payment possible on your smallest debt, while maintaining minimum payments on others. Once this debt is repaid, apply its payments to the next smallest debt. Repeat this method until all your debt is repaid. This method allows you to see progress quicker giving you the excitement and momentum needed to stay the course and get to the finish line. Consider debt consolidation strategies or refinancing options that could help streamline your payments and potentially reduce interest rates. Reducing debt not only improves your financial health but also frees up resources for other important goals.
- Dust Off Your Credit Report
As you are dusting all of those hidden areas in your home, take time to dust off your credit report. Your credit report plays a significant role in your financial well-being. Utilizing Annual Credit Report.com, obtain a free copy of your credit report from each of the major credit bureaus and review them for accuracy. Look for any discrepancies, errors, or fraudulent activity that may impact your credit score. Dispute any inaccuracies and address any issues promptly. A clean credit report ensures you have access to favorable loan terms, better interest rates, and increased financial opportunities.
Spring cleaning your finances is a must and can bring about a sense of renewed purpose and confidence in your financial journey. By dedicating time to focus, adjust, and update your financial records, budgets, beneficiaries, and goals, you can create a solid foundation for long-term financial success. Just as a clean and organized home and yard bring peace and joy, a well-managed financial life provides security and freedom to pursue your dreams. Embrace the opportunity this spring to refresh and revitalize your financial wellness.