As the weather improves, so does our motivation to spring clean our homes and gardens. But what about your finances? Here are five ways to spring clean your finances:
Take Inventory
- Pull your last three months of bank statements and sort your spending into categories, then reevaluate your priorities.
- Streamline your spending by looking at your streaming services, mobile phone plans, cable, internet and other monthly subscriptions. Can they be adjusted, reduced or negotiated to a lower price?
Create a Budget
Maybe you’ve used a budget in the past or maybe it’s something new to you. Once you’ve determined your spending habits (above), perhaps it’s time to set some financial goals and set some spending guidelines to help you achieve your financial goals.
- Categorize your spending into three categories: fixed, variable and discretionary
- Review all your income sources and come up with an average monthly income figure
- Set financial goals into three categories: short term, medium term and long term
- Review your debts, interest rates and minimum monthly payments
- Use pen and paper or the help of an online budget calculator to come up with a budget. You may need to adjust your discretionary spending to make your income and expenses balance
Set up reminders
- Review your bill and debt payment due dates and set reminders or automatic payments
- If the due date doesn’t match up with a pay day, don’t hesitate to contact the credit company, lender or utility company to ask for a change to your billing cycle
Evaluate and Pay Off Debt
- Make a list of each debt, the interest rate and the minimum monthly payment
- Prioritize which debts you’d like to pay off first (choosing either the lowest debt or the debt with the highest interest rate)
- Contact your creditors to see if you can negotiate a lower interest rate
Put Your Plan into Action
Once you’ve gone through each set and have set up a budget, set some financial goals and have made a plan to pay off debt, put your plans into action.
If you find that you cannot balance your budget or set savings targets because of your debt load, then it may be time to talk to a Licensed Insolvency Trustee to find out your options in dealing with your debt.