If you’re in the Northeast like I am, you’re ready for spring. Even though we’re expecting 4-8 inches of snow in the next few days, spring is here. While the weather hasn’t turned yet, the calendar and the clocks have, and it’s time for some Spring cleaning. “Cleaning” in the financial sense is more so a process of “simplification” than actual cleaning… but Spring simplification doesn’t have the same ring to it.
Here are five quick easy things you can do to clean up your finances and set yourself up for less stress surrounding money.
Pay off any Small lingering debts
This may seem like something that you’d already have done if you could, but it really isn’t. A lot of people just let debt ride because they’re on “auto-pilot”. I’d urge you as a part of your spring cleaning to simply take stock of the things that you are paying every month. It could be a credit card, it could be a loan on something relatively small like a furnace or furniture. Take stock of these debts, make a list, and if there are any that you can knock out right now, DO IT! Step one of cleaning up your financial life is to simply cut back on the number of hands in the cookie jar. The fewer companies you have to deal with the better off you’ll be. Simpler is nearly always better.
Pull your credit report
If you are in a situation where you’re just getting started, or you’ve had a bankruptcy, or you’ve made a lot of mistakes in the past, you may have some surprises here. This simple step will simply allow you to take stock of your current situation and at least have a very clear picture of where you’re starting from. The other benefit of just pulling your credit report once a year is to make absolutely certain that there not only is nothing you forgot about, but no cases of fraud. Identity theft isn’t limited to card skimmers on gas pumps. You may find that your credit has been repeatedly checked in the last 12 months while you haven’t applied for any credit. This would indicate that you have been the victim of possible identity theft without seeing it hit your bank balance.
Start your first budget, or make a Real one
If you’ve never actually sat down and gave every dollar of income a mission, prior to it entering your account, Now’s the time! We’re all aware of tons of budgeting apps. There are ads for them everywhere. You can even sit down and simply write out your own on a yellow pad. We all understand the concept. The trick is you have have to DO IT. You’ve missed the new year’s resolution window but if you’re looking for a catalyst or a reason to get started the guise of “spring cleaning” is a great one. A budget will truly give your life a “cleaner” feel. When you’re not going in without a plan, and sitting around wondering where the hell the money went at the end of the month, I promise you will greatly reduce the stress and worry you feel around money.
Automate where you can
Pay yourself first. I’m sure we’ve all heard that phrase and it can lose a little meaning over time. I’ve always felt you should take it one step further. Most of us don’t have to go to our employer every pay day and request our paycheck. That’s the system you’re operating on if you simply “pay yourself”. The money comes home and goes into your account, then you have to make the decision to pull it out and put it into an investment or into savings. By automating this process (which is very simple) you take the hassle and willpower out of the savings process. Anything that can be automatically deducted from your check, that’s your best option. You can’t miss it if it never comes home. If you have regular paychecks, set up automatic transfers from your checking account to go straight into savings the same day as your paycheck clears. If you’re unsure of your exact plans for the money, take the money that you’re comfortable investing (regardless of where it’s going to end up) have it automatically pulled from your usual checking account, and into an online savings account. I use an online savings account personally because A. you don’t have the option of having it in your actual physical bank (again taking willpower out of the equation) and you can often comparison shop very easily for the best rate. It also has the added benefit of making the money a little tougher to get to.
Check your rates
This may seem like a hassle, but you only have to do it once a year. It is worth once a year getting a new quote on your insurances and interest rates. Term life insurance (due to the rising life expectancies) has actually seen an unusual trend where you would be better off re-upping each year in many cases, in spite of being a year older. Provided of course that you’re in good health. It is also a good idea to run an annual check on your auto insurance, and to check on the interest rate that you’re earning on any money you have in traditional “Savings” accounts.