by James Mitchell, Negosentro.com |
Just as your house is in dire need of some organization, consolidation, and decluttering this spring, so is your financial situation. Maybe you have a disheveled drawer of important documents, some unused credit cards gathering dust, or some recurring payments for services you simply don’t use anymore – whatever your financial shortcoming, a good spring cleaning will help you get and stay on the right track this year. Here are some ways to make that happen.
Take a detailed look at your expenses
Proper budgeting is key to financial success, and you can’t properly budget if you don’t have a firm grasp on exactly where your money is going every month. Print copies of your bank/credit card statements and bust out a highlighter.
“Use one color to highlight your necessary costs (utility bills, insurance, groceries, toiletries), another to highlight items you bought because you really wanted them (your Netflix subscription or the new vacuum cleaner that’s easing your allergy symptoms), and another to highlight less thoughtful purchases (that round of drinks you bought at happy hour),” suggests RealSimple.com.
Once you see where your money is going it’ll be easier to make cuts in the appropriate places. When it comes to budgeting, a good rule of thumb is to use the 50/20/30 rule, in which 50% of your budget is for essentials (bills, utilities, food, debt payments, cost of childcare), 20% is for savings, and 30% is for everything else. If you’re spending more than 30% on elective costs, it may be time to move some more money toward savings.
Take a second look at your accounts in 5 crucial areas
Take the time to consolidate, refinance, or simply eliminate excess in five specific financial areas: banking, credit cards, estate planning, retirement savings, and insurance. When it comes to banking, try to consolidate accounts and make sure you are using a no-fee checking account. For credit cards, pare down your lesser-used cards and begin to pay off low balances. Try to only use one or two cards. For estate planning, get your will in order so that your family will be prepared for the unexpected. For retirement investments, consider consolidation.
“You could also have your investments scattered about – an IRA here, a new 401(k) there, and an older 401(k) someplace else. But if you consolidated all your investments in one place, you might cut down on paperwork and fees, and you wouldn’t risk losing track of an asset (which actually happens more than you might think). Even more importantly, when you have all your investments with one provider, you’ll be better positioned to follow a single, centralized investment strategy,” notes Edward Jones.
It’s 2017, and there’s no reason your finances have to be recorded on paper, haphazardly thrown in a drawer somewhere. Scan your important documents into digital files. They’ll be much easier to organize and recall when you need them down the line. Set paperless billing up with the various services you receive – internet, gas, electric, student loans, credit cards, etc.
Automatic bill pay is another way to eliminate clutter as well as keep your stellar credit. “Spring cleaning isn’t only about de-cluttering – it’s also about making things more efficient. Set up automatic bill pay, and link it to your primary checking account. Automatic bill pay will eliminate the chances of missing a payment and paying those pesky late fees,” says MyCreditUnion.gov.
This year, when you finish organizing your closets, dusting the furniture, and mopping the floors, get out your financial documents and begin to spring clean your money matters. Just a few hours of work could set you up for success.