Spring-cleaning isn’t just for your home. You can spring-clean your finances too. Everyone needs to keep track of their finances carefully to maintain control of their money. Failing to establish a budget is a top cause of financial chaos.
It is of utmost importance to constantly be aware of how much money is necessary and available for the cost of living expenses versus disposable income for entertainment and leisure.
With the tax season gone, you have a full-fledged year to get your finances in shape. You can begin cleaning up your finances by shredding old statements, bumping up 401k contributions and setting up a personal tax organizer folder for 2017 taxes. That’s not enough, though. You need to take some essential tips for keeping your finances in order.
Here are some of the spring-cleaning tips by financial experts that will help you get your finances in order:
Tip #1: Assess Your Financial State
The most important step is to make a clear assessment of your current financial state. Begin by evaluating the debt you’ve accumulated. Check how much you’ve saved.
Take inventory and compile information that reflects your current financial state, such as income, credit, expenses, taxes and debt.
Document a personal finance statement that lists your assets and liabilities. It should also reflect your net worth for each of the past few years. Keep your financial paperwork organized in one place, and in a manner in which you have immediate access for tracking and reference.
Tip #2: Set SMART Financial Goals
Financial experts have long stressed upon using the acronym SMART while setting up your financial goals. SMART stands for specific, measurable, attainable, relevant and time-bound.
After you’ve decided upon a financial goal, make sure it fulfills all these conditions. Sticking to the SMART principle enables you to stay reasonable with your plans.
Tip #3: Set a Budget
Determine the amount of money coming in and going out each month. Examine your credit lines and whether or not you can borrow additional cash without negatively affecting your credit score.
Make financial forecasts for the year and set goals for spending limits. Prioritize a list of your most important expenses and make notes on alternatives.
Tip #4: Cut Costs
Visualize all the different ways you can save money on monthly expenses. Cut energy costs by using less electrical lighting, heating, cooling and appliances. Reduce the amount of eating out at restaurants and focus on preparing your own meals. Instead of going on vacations or frequently visiting night clubs, develop your own hobbies at home for entertainment.
Make a list of discount stores in your area that you can view as a reminder when you go shopping. Use the internet for finding better deals than what you see in physical stores.
Tip #5: Negotiate and Shop For Lower Prices
When you need repairs on your home or car, try to negotiate prices in your search for the best deals. Don’t pay more cash than you need to.
Pay attention to online and printed coupons that offer lower prices. Figure out how to resolve problems yourself when it comes to doing repairs within your capabilities. While buying furniture, visit garage sales and flea markets to get lower prices.
Tip #6: Restrain from Spending
Once you realize your budget constraints, exercise strict spending while window shopping at the malls. Do not fall into the temptation of going on impulsive spending binges.
Stay close to meeting your needs for food, shelter and other immediate costs, and limit yourself from driving around and using up too much gas. Think about walking more, which provides healthy exercise. If you prefer not to walk, consider cheaper forms of transportation such as taking the bus.
Tip #7: Be Prepared to Adjust Goals
Be aware that unexpected factors such as health bills or car repairs may affect your budget at any time. You should have a safety net, such as a savings account, in place in case of emergencies.
By living a healthy lifestyle with a focus on nutrition, exercise, and a stress-free outlook, you may potentially reduce expensive trips to the doctor. Try cutting down on unnecessary desserts and more recreational items such as alcohol. Your willpower to resist depleting your resources can be enhanced by taking emotion out of the equation.
Tip #8: Get Assistance from a Financial Advisor
Search online for a financial advisor that can provide insights on further savings and build a plan for the future. Ask about how you can improve your financial situation through savings and investments. An experienced professional can guide you toward a sensible retirement plan.
Avoid making quick decisions when it comes to selecting a financial advisor. Do plenty of research so that you develop a long term relationship with someone you know you can trust.
Tip #9: Automate Your Savings
Financial experts suggest automating your retirement investments like 401 (K) as an excellent way for financial spring-cleaning. Automate your savings through a free automated savings tool. Such automated tools will keep a check on your spending patterns and encourage saving. These will be really useful while saving for summer vacation, college tuition fees, or an emergency fund.
Digit is a highly recommended free savings tool you can use. It checks your spending habits and removes a few dollars from your checking account when you can afford it. It enables you to easily withdraw your money anytime, quickly and with no fees.
Tip #10: Get Rid of Debts
Financial experts recommend getting rid of your debt as a principal step to your financial freedom. Don’t get overwhelmed by a huge amount of debt. Make paying it back a priority.
Use this year’s tax refunds to pay off a debt with the highest interest. Once you get rid of that, begin paying off the debt having next highest interest, and so on.
Experts also suggest taking a personal loan to pay off overriding debt amounts. Sometimes, it’s difficult to get a loan if you have a poor credit score. In such cases, online payday loans that get approved within a day can come to your rescue. It requires you to have a checking account. You can always pay it back once you get rid of your big debts. Make sure you take payday loans from an approved lender.
Follow these spring-cleaning tips and enjoy your way to financial freedom.