What will bring you joy?
It’s easy to get stuck in a rut when there are bills to pay. The daily minutiae often keep us focused on the near-term, meaning lofty aspirations for the future may not get the time, attention and funding they deserve.
Before diving in to the nitty gritty of household budgets, pause to think about what longer-term goals you have been working toward: College savings for kids? Becoming debt free? Owning a business? Taking an early retirement?
As you start cleaning up your finances, make room for those important ambitions by including them in your plans and savings strategies.
Are you out of balance?
Review your budget and determine if you’re balancing your earnings with your spending. If the bills are paid, savings and emergency accounts are funded, and cash remains, then spring cleaning should be a breeze. If overspending is an issue, this is the time to get it under control.
Review your bank and credit card statements for purchases and subscription services you can do without. If you subscribe to multiple streaming services, for instance, decide if eliminating all but one will impact your happiness. Consider other purchases you’ve made in recent months and whether they brought lasting joy. Put some rules in pto curtail impulse buys, such as waiting a day or two to hit the purchase button or avoiding late-night shopping altogether. It may also be necessary to cut back on treats – such as daily coffees, dining out or expensive vacations – to get back on track.
Refine your savings strategy
Even if you’re operating in the black each month – but especially if you aren’t – entertain other ways to boost savings. Oftentimes, customers stay with a service provider out of habit, but making a switch could provide a financial boost without having a material impact on your happiness.
Say your auto or homeowner insurance is coming up for renewal; request quotes for comparison to see if cost savings may be available. If your credit card company charges a high interest rate, ask if you qualify for a reduction or keep your eyes open for new balance transfer deals.
Additionally, keep tabs on your credit report and secure a free copy, available every 12 months, from one of the three credit rating agencies. Review it for accuracy, and determine if your actions are contributing to a lower score than desired. A pattern of late payments could be remedied by setting up automatic bill payment, for example.
While a higher credit score doesn’t provide immediate savings, it can help in securing loans at more favorable terms in the future, which would help you save money when buying a car or a home later.
Pay off debt and build long-term savings
Getting out of debt can be a big relief. Generally, any outstanding credit card or other debt that can be paid off should be, simply to avoid the interest payments that snowball over time. Talk to a banker to set up a plan on how to chip away at debt, whether it’s targeting high interest debt first or tackling smaller balances to reduce the number of accounts outstanding.
Once debt is under control, you can focus on setting aside savings for emergencies or for those long-term goals that will ultimately bring you joy. To be deliberate about savings, establish separate accounts for each purpose and commit to funding each with a set amount each month. For goals that are a long way off, interest-bearing or even investment accounts could provide additional growth opportunity for your funds. Again, talk to a banker to discuss your options.
With a little effort, some financial spring cleaning can inspire a fresh, organized approach to budgeting for the rest of the year and into the future.