The spring is a time for new beginnings. We clean out our wardrobes and get rid of old furniture, to make room for new things. Your financial situation can also benefit from a spring cleaning spree, especially if it is in a state of neglect. Here is how you can spring clean your finances back into order.
Get Rid of Old Spending Habits
Take the time to look over your spending habits. Get rid of the patterns that cost you more money than is necessary. Some, like grocery spending and car payments, may be necessary, but that doesn’t mean you can’t adjust them to better fit your financial goals.
Start by looking at your leisure expenses to find out what you can reduce and what you can cut completely. If you eat out every Friday and Sunday night, for instance, reel it back to just Fridays, or lessen the allocated spending limit for both outings.
Reevaluate your Budget
Revive your budget and adjust it where necessary. If you fell off the budget wagon somewhere along the way, this is the time to get back on it.
It is prudent to adjust your budget at the beginning of every month. These small tweaks are what make budgets capable of helping you realize your financial goals, without putting you through financial stress.
If you find the budgeting process difficult, enlist the help of the financial software of your choosing. Most importantly, track your spending throughout every month to evaluate how well you stick to your budget.
Catch Up on Late Payments
If you’ve fallen behind on, say, your mortgage payments, this is the time to catch up. Catching up on your outstanding debts puts your finances back in balance and prevents financial problems down the line.
It is advisable to clear off late payments using a lump sum. It’s not always necessary to go on a spending fast to make money available. You may have a cash reserve stored somewhere or are willing to sell off some assets (think yard sale) to make that happen. Either way, you should be able to bring your payments up to date to avoid unmanageable debt.
Clear Out Your Debt
Debt affects your credit rating, and makes it quite hard to create a financial plan for your future. As the motto, ‘out with the old, in with the new’ suggests, this is the time to clear your slate of all old debts so that you can better plan for your financial future.
You may need to create a debt payment plan for this. The payment plan should show the debts to pay, the order in which you should pay them, and where to get the funds to pay them off. Ideally, your debt payment plan should align with your budget for easier financial management.
Create a New Financial Plan
Once you’ve eliminated debt, caught up with your payments, and created a new budget, what’s left is to reevaluate your financial plan.
You could be planning to retire early or buy a house or send your kids off to college. You can only achieve that with a clear financial plan, one that contains the timelines for achieving all your goals.
Of course, every good financial plan is adjustable, and you will need to change things every so often to accommodate life changes. You will find it easier to make tweaks if you already have a working plan.
As the Business Banker for Henry County, Dodie Cason is passionate about serving local businesses. Working directly with business owners and professionals; she is diligent in her desires to find solutions that save time and money, build financial stability and simplify banking processes. You can count on Dodie to serve you with a friendly smile, a compassion for your needs and a commitment to excellence.
AVP, Business Banker • 770-515-7209 • [email protected]