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Spring is here, which means it’s time to clean up the flower boxes and fertilize your lawn. However, the earliest time of the year is also a good time to get your financial life in order, especially if you feel like you can’t move forward or don’t have financial goals on your roadmap.
How to do a general cleaning of finances? Almost any step you take to save more, spend less, or plan for the future can make you better next year than you are now. However, the experts we interviewed suggested strategies such as reviewing your bank statements, rolling over old retirement accounts, getting control of your debts, and checking your credit reports to get you in the best shape possible.
And while personal finance may not be much fun, it’s a lot like spring chores. We may not like to sow the lawn or mulch, but most of us do it anyway. Here’s a rundown of ways to improve your financial life this spring.
If you’re chasing financial freedom but can’t seem to get ahead, now is the perfect time to look at your average spending to see if you can cut back. Financial Planner Kurt Heinemann Financial Planning Vision Casting says he recommends starting with the purchases you’ve made in the last few months, pulling out bank statements and credit card bills, and reviewing your spending.
When you go through all your regular purchases, see if there are any subscriptions that you no longer need or are even duplicates. “It’s an easy way to cut your costs by potentially hundreds of dollars a month,” Hyneman says.
Other spending habits that may require cutting back (or at least some trimming) include money spent on restaurants or entertainment, frequent online shopping, or even hobbies that are rapidly increasing in value without you realizing it.
Either way, you won’t know how much you’re actually spending each month until you check, so that’s where you should start. Then see where you can make cuts.
If you really want to cut your spending this spring, you can dive into the world of budgeting and start giving every dollar you make to “work.” This tip comes from Jesse Mecham, founder of the money management app. YANAB.
Mecham says that instead of using your bank account balance to dictate your spending habits, you should create a plan for how you will spend every dollar you earn.
“This will encourage you to be more conscious of spending and give you the opportunity to stretch your money even further,” he said.
You can use the YNAB app to create a monthly budget that you can stick to and this app will also help you keep track of your expenses in one fell swoop. You can also consider free budgeting apps like Mint, or even the traditional pen-and-paper budgeting method where you write down your expenses in one column and try to stick to set spending limits for the month.
Automate and grow your savings
While using a budget can help you organize your income and expenses wisely, says financial planner Ksenia Yudina from UNest adds that you can get even further financially by automating your savings each month and setting financial goals.
“Spring is a great time to look into the future and set your short- and long-term financial goals, such as buying a new home, saving for a vacation, buying a new car, or renovating an existing home,” Yudina said. “Once you define your goals, you can start making monthly contributions to your savings or investment account to make sure you reach them.”
Fortunately, many large online banks allow you to set up automatic savings transfers that occur on a given day of the month. You can also use an app like Acorns that automatically rounds up all your purchases and invests money on your behalf.
Meanwhile, spring is a good time to take a look at your emergency financial reserves to make sure you have enough for your needs. Between a pandemic, inflation and a potential recession, Mecham says having an emergency fund becomes increasingly important.
“Protect yourself in the future against these uncertainties by prioritizing any extra dollars you have for your emergency fund,” he said.
If you are looking for a place to store your money savings, you may want to consider a high yield savings account due to the high interest rates. For example, CIT Bank Savings Connect the account offers 4.5% per annum on cash savings with no fees.
As workers change jobs more often, layoffs due to COVID-19 and ongoing layoffs occur across the country, financial planner Vincent Grosso of Paskak Capital says now is a good time to combine some of the retirement accounts you may have from previous jobs.
This move can help you simplify your finances by moving all investments to one place and you can merge several into a new brokerage firm that may have lower commissions or better investment choices.
If you need help consolidating old 401(k) accounts, a financial advisor can help you through the process. However, you can also transfer your old retirement accounts to a new IRA yourself with the help of brokerage firms such as Vanguard and Fidelity.
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Interest rates have been rising for over a year, which is another reason why you should take stock of your debt levels and look for a solution. If you have credit card debt somewhere close to average annual out of 20.56%, a few simple steps can help you save money, pay off debt faster, or both.
Financial planner Jordan Taylor Basic planning says that high-interest credit card debt can easily cost you two to three times the amount you originally borrowed, and that debt consolidation can give you a lower interest rate, a better monthly payment, or all of the above.
While using a personal loan for debt consolidation can help you secure a fixed interest rate and a fixed monthly payment, you can also look into balance transfer credit cards such as Citi® Diamond Preferred® Card. This card currently offers 0% initial APR on balance transfers for 21 months (from 17.74% to 28.49% thereafter). To qualify for this rate, transfers must be made within the first four months of opening an account.
Check your credit reports for errors
Your credit score is an important component of your credit health, and your credit reports are the only place you can spot potential problems (or even mistakes) early on. That’s why Sam Weisfeld, editor-in-chief FinImpactsays it’s critical to check your credit reports for errors at least a few times a year.
Fortunately, you can check your credit reports with all three credit bureaus – Experian, Equifax or TransUnion – once a week this spring (or any time during the year) at AnnualCreditReport.com for free. This can help you find errors that could damage your account through no fault of yours, or even some of the earliest signs of identity theft. And don’t worry, it won’t hurt your credit score when you check your credit.
If you find errors or incorrect information in your credit reports, you should follow Federal Trade Commission (FTC) recommendations to discuss these issues immediately.
According to Consumer Financial Protection Bureau (CFPB)some of the more common credit report errors to watch out for include incorrect balances, false reports of late payments, accounts you don’t recognize, accounts that report open but are actually closed, and accounts that list more than one. times.
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Spring is here and it’s a great time to brush up on your finances. The steps outlined here can help you get the edge, and that’s true whether you’re new to personal finance or you always keep your head in the finance book.
Don’t wait another year to get your money in order and your future self will thank you.
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