5 Ways to Spring Clean Your Finances
Spring is right around the corner, and there is no better time to perform a spring cleaning of your finances. One way to get your finances whipped into shape is by setting reasonable financial goals that can help you get on track for a successful year. Always make sure that your goals are specific and attainable so that you do not succumb to frustration and end up giving up before you achieve them. In addition to shredding unwanted documents to clear up space, to start your spring season off right, consider one or more of the five financial goals listed below.
1. Create and Stick to a Budget
While most people believe that they are following a budget, few have actually sat down and created a detailed budget that accounts for all of their expenses. Start by setting a budget that includes all of your major expenses including home expenses, insurance, car expenses, and utilities. Then create a budget for costs that may fluctuate such as clothing expense, gifts, medical costs, and food. Finally, add budgets for monthly savings goals such as an emergency fund, vacation funds, and long-term savings. After finalizing your budget, record all of your expenses throughout the month, making sure to record every transaction. Most women love to shop, so this will give you a true picture of where your money goes and how far off your budget you may be spending.
2. Trim Some Fat Off Of Your Monthly Expenses
Once you have identified where your money is being spent, now is the time to find areas where you can safely cut back, to either give a cushion to your budget or start adding more to your savings. Start small by finding one or two areas where you can afford to cut back. Start by shopping some of your monthly bills like cable and phone. Many times there are better options or new packages that you can switch to which will provide you with a lower monthly cost. Give them all a call, you may be surprised by the discounts they offer you because they don't want to lose you!
3. Climb Out of Debt
Unfortunately, debt and life go hand in hand, but it can easily get out of control, hindering you from meeting your long-term financial goals. Whether you are bogged down with student loan debt or credit card debt. Having a plan to aggressively pay it down and sticking with it can save you a significant amount on interest, and provide you with more money for your savings goals. Consider possibly consolidating student loans. When it comes to credit card debt, try to make at least double the minimum payment. If double the payment is too much, try adding an extra $100 to each minimum payment.
4. Save More for Retirement
The cost of retirement is continually rising, and if you want to ensure that you have enough to sustain you during retirement, you should be saving as much as you can as early as possible. The earlier you put your money into your retirement savings, the longer it will have to grow, providing you with a better return on your investment. Make a point to make some room in your budget to increase your contributions a couple of percentage points. When every you get a raise, add that to your savings.
5. Start or Grow Your Emergency Fund
An emergency fund is a great way to stay on track financially when the unexpected occurs. Loss of employment, major medical expenses, or significant house repairs, can lead to unexpected costs that can ruin your budget for months. The rule of thumb is to have at least six months of expenses saved, making sure to replace funds anytime that you draw from them. If you already have your emergency fund started, set a goal to increase what you add to it each month even if it is only $50. If you don't have an emergency fund, now is the time to start it. Set reasonable goals for your fund, so it doesn't seem overwhelming. Set your first goals at $2,000 to $3,000, which should be able to cover any major car repair or the deductible on your homeowner's policy if you were to sustain a loss.
Whether starting small or building on other goals, having set financial goals is a great way to get motivated to get your finances in shape for the upcoming year. Remember to always set goals that are specific, measurable, and attainable, to prevent frustration and allow you to see the results of your hard work.
About Angela
Angela Dorsey is the founder and financial advisor at Dorsey Wealth Management, a fee-only financial planning firm based in Torrance, California, helping women prepare for retirement. Angela earned a BS in computer science from Loyola Marymount University, an MBA from UCLA Anderson School of Management, and spent 20 years as a Senior Compensation Specialist in large corporations before becoming a CERTIFIED FINANCIAL PLANNER™ professional and a Registered Investment Advisor (RIA). That background gave her the tools to couple with her passion for empowering women to make the best financial decisions possible. Angela lives in Torrance, California, with her husband. She enjoys spending time at the beach or surrounded by nature. To learn more about Angela, connect with her on LinkedIn.
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