Spring is known as the time when the weather finally changes from the brutal cold and you can crack open your windows to get the stale air out of your home that has been building up for the winter months. Spring cleaning is on everyone’s to-do list by cleaning out the closets, washing the floors, and windows. If you have not made your finances a priority thus far, then it is time to get those in order at the same time you are cleaning your home.
Figure Out Your Goals
Whether it is saving for a summer vacation that you have planned, creating a monthly budget to gain extra money, or start thinking of the future, you will need to decide what is most important and feasible to do. Work with your spouse or family/friends that you trust to gain input and put together a plan of your goals, what it takes to achieve, and a plan with a start and end date in order to complete.
Build an Emergency Fund
We have often mentioned that an emergency fund is important to keep a stash of available funds in case of, well, an emergency. If something breaks down or even go between jobs, it is nice to have three to six months’ worth of expenses in reserve so that you do not have to put on a credit card and fall into (or further) into debt. Although all spending and saving is equally important to work on, have an emergency fund is a good place to start.
Go Through Current Spending
It may be a painful process, but the only way you can see where they money goes each month is to look at your account statements. Take the previous month to start and review all necessary expenses such as mortgage, utilities, and car leases. Gas and grocery shopping should be included in these necessary expenses. The next tier of spending is where you can particularly take a look at, and ask yourself if this purchase was worth it. Chances are, if you spent $50 going out to eat, it was not that great, you could have eaten at home for a fraction of the price, and you have a pattern of going out to eat.
Evaluate Saving for the Future
Whether you are contributing very little or none to save for the future, or significantly, there is room to increase in order to have sufficient savings for your retirement years. Now that an emergency fund it built up and you are freeing up additional funds with monitoring your spending, the leftover should be saved towards your future, whether that is more towards a 401(k) account, or opening an IRA.
Stick with the Plan
Reducing spending and actually using that savings to stash away and not use is tough, and it will take discipline, so now you can work on sticking with a path to complete your financial goals. As you see the progress by your savings rising, those avoidable going out to eat meals will not be missed.
Getting ready to file tax returns surely “motivates” a clean up (or is it just me?). But it is always best and even easier to do a little keep up now and then than waiting for the right time to get in shape (trying to get better at this).
PS dining out is so avoidable an unnecessary: it is usually better, healthier and cheaper to dine at home (I am reasonably good at this)