Financial Spring Cleaning
Spring is the perfect time to declutter and tidy up, and that applies to your financial situation just as much as your closets. The gap between holiday expenses and summer travel provides an excellent opportunity to assess where you’re at financially and figure out how to get where you’d like to go. Below are a few items you may want to approach with a spring cleaning mindset:
If you’re expecting a refund, now is a good time to plan what to do with it. Was it a scramble to prep all of your tax documents this year? Create a checklist now to make it easier on yourself when tax time comes back around next year.
When was the last time you created goals for yourself or, better yet, assessed how you’re doing on achieving them? Creating clear long-term goals enables you to work backward to create mid- and short-term goals to get you there.
Organize your debts and create a gameplan of how to pay them off; here are two common approaches to paying off debt. The “debt avalanche” method involves making minimum payments on all debt, then using any extra money to pay off the debt with the highest interest rate; it results in less interest paid over time, but it can be hard to stay disciplined. The “debt snowball” method involves making minimum payments on all debt, then paying off the smallest debts first before moving on to bigger ones. Over the long term it is more expensive, but it’s easier to maintain motivation as it yields quicker results.
Instead of thinking of budgeting as a list of things you’re giving up or reducing, think of it in terms of prioritizing and designing what you want your spending to do for you. What do you care the most about, and how can you allocate more resources to it?
These are just a few examples of how you can take a spring cleaning approach to your finances.