With spring upon us, it’s time to think about spring cleaning your finances. Take advantage of April being National Financial Literacy Month and make sure that you are literate and educated on your financial situation’s past, present, and future. How has your spending affected your current financial situation? Where do you hope to be financially in the short-term and long-term?
The first step is to evaluate your debt and figure out what you currently owe. Add up your student loans, mortgage, credit card debt, and anything else that you’re paying interest on. Do you have a game plan on how to pay off that debt? Comparison shop interest rates and think about refinancing your mortgage, or contacting a credit card counselor to help figure out how to consolidate your debt.
Once your debt has been evaluated, the next step is to figure out your financial goals for the year. Are you looking to save for a fancy vacation? Are you planning on becoming a stay-at-home parent? Whatever you have planned, calculate how much you’ll need to save for that event.
Next, update your monthly budget. Costs have changed considerably over the last year, and you probably haven’t adjusted your budget accordingly. Perhaps you’ve moved in the last year and your rent has changed, or you’ve gotten a big promotion at work with a pay boost. Whatever the life change, make sure your budget reflects it, as well as your savings goals. For example, if you are trying to save $6000 by the end of the year, you’ll need to adjust your spending so that you’re putting aside at least $500 a month.
You can make changes to your budget by shopping at less expensive grocery stores, or relying on thrift and secondhand stores for clothing and home goods. This is also an excellent time to check on your rewards points, whether frequent flyer miles or other rewards that you’ve racked up over the year through credit card or spending programs. You may be able to boost your updated budget by using the rewards accrued through your different accounts.
Since you get one free credit report per year, finish up your financial spring cleaning by checking your credit report. Whether you order from annualcreditreport.com or creditkarma.com, you can check your reports for errors and save yourself some points on your score. It also gives you a starting point for your financial goals. That score can help you get better loans and interest rates, along with better financial peace of mind.
Now that your goals are evaluated, your budget is planned, and your credit score is all set, it’s up to you to stick to the plan. Financial spring cleaning is only helpful if you dedicate yourself to making your goals happen!