Spring Clean Your Finances
Spring is not only a great time to put away the winter clothes and deep clean the house. It is also a good time to check in on your finances. Remember those beginning of the year goals like saving more, meal prepping and going to the gym (which by now may have tapered off)? This time of year is great to spring clean your financial goals and set yourself up for success the rest of the year.
Here are a few things to help with the Process:
One of your goals this year may have been to tackle debt. Check in on how you're doing with that. Are you meeting your repayment goals? If not, what do you need to do now to get back on track? Identifying why you have fallen off track on debt reduction can also point to other areas that you want to refresh in your financial picture.
Now is a good time to check to see if you have established your emergency fund. Your emergency fund should be three to six months living expenses. If you haven't done so yet, this should be moved to the top of the priority list. You should also check into your other savings goals for the year: Are you planning a vacation, saving for a downpayment on a home? Whatever your goals are ensure that they are being met.
How have your spending habits been progressing? Are your expenses lining up as planned, did you overindulge or have an emergency happen? If so you may want to revamp your budget or try a different budget methodology - whatever works for you.
4. Taxes and Financial Documents
Review your taxes and other important financial documents. It is wise to keep tax documents for at least seven years, so make sure to file those away safely. It may also be a good idea to digitize your bank and/ or credit card statements and keep them in a folder on your computer. Make sure to have a back-up of this somewhere.
Review your credit reports thoroughly! Check for errors and any indication of identity theft. While you're at it check your credit score.
5. Become Financially Savvy
Financial literacy is key and there are many ways to up your game in this department. Talk to a friend that knows more about a particular financial topic than you do, follow a few finance experts on social media, read books, listen to podcasts, subscribe to the Wall Street Journal or Financial Times, attend seminars. There is no excuse for being uninformed in this department. Information is out there, you just have to find it.
These are only small steps but they are very important ones. Having a solid financial plan will help you avoid pitfalls. What kind of financial spring cleaning plans do you have?