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Spring is here, and that means it’s time to clean out your flower boxes and fertilize the lawn. However, the earliest parts of the year are also a good time to “spruce up” your financial life, particularly if you feel like you can’t get ahead or don’t have financial goals on your road map.
How can you spring clean your finances? Pretty much any step you take to save more, spend less or plan for the future can leave you better off next year than you are now. That said, the experts we interviewed suggested strategies like poring over your bank statements, rolling over old retirement accounts, getting a handle on your debts and checking your credit reports to get yourself in the best possible shape.
And while personal finance may not be a ton of fun, that makes it a lot like spring chores. We may not relish in seeding the lawn or laying mulch, but most of us do it anyway. Here’s a rundown of ways you can improve your financial life this spring.
Assess your spending habits
If you’re chasing financial freedom but can never seem to get ahead, now is as good a time as any to look at your average spending to see if you can make some cuts. Financial planner Kurt Heineman of Vision Casting Financial Planning says he recommends starting with the purchases you have made over the last few months by pulling out your bank statements and credit card bills and reviewing your spending.
As you review all your regular purchases, see if there are any subscriptions you no longer need or even have duplicates of. “This is a simple way to reduce your spending by potentially hundreds of dollars a month,” says Heineman.
Other spending habits that could need the ax (or at least some trimming) include money spent on dining out or entertainment, frequent online shopping or even hobbies that add up quickly in cost without you realizing it.
Either way, you won’t know how much you’re really spending each month unless you check, so that’s where you’ll want to start. Then, look at where you can make some cuts.
Get the hang of budgeting
If you really want to clean up your spending this spring, you can dive into the world of budgeting and start giving each dollar you earn a “job.” This advice comes from Jesse Mecham, who is the founder of the money management app YNAB.
Mecham says that, instead of using your bank account balance to dictate your spending habits, you should create a plan for how you’ll spend every dollar you earn.
“This will encourage you to be a more conscious spender and empower you to stretch your money further,” he says.
You can use the YNAB app to make a monthly budget you can stick to, and this app will also help you track your spending in one fell swoop. You might also consider free budgeting apps like Mint, or even the traditional pen-and-paper budgeting method where you write your expenses in one column and try to stick to set spending limits throughout the month.
Automate and beef up your savings
While using a budget can help you organize your income and spending in a way that makes sense, financial planner Ksenia Yudina of UNest adds that you may get even further ahead financially if you automate your savings each month and set financial goals.
“Spring is a great time to look ahead and determine your short-term and long-term financial goals like buying a new house, saving for vacation, getting a new car or remodeling your existing home,” says Yudina. “Once you figure out your goals, you can start monthly contributions into your savings or investment account to make sure you achieve them.”
Fortunately, many major online banks let you set up automatic transfers to savings that take place on a given day of the month. You can also use an app like Acorns that automatically rounds up all your purchases and invests the money on your behalf.
In the meantime, spring is a good time to look at your emergency financial reserves to see if they’re enough for your needs. Mecham says that, between the pandemic, inflation and a potential recession, having an emergency fund is increasingly important.
“Protect your future self from these uncertainties by prioritizing any extra dollars you have for your emergency fund,” he says.
If you’re looking for a place to store your cash savings, you might consider a high-yield savings account due to high interest rates. For example, the CIT Bank Savings Connect account offers 4.5% APY on cash savings with no fees.
Consolidate 401(k) accounts
With workers changing jobs more frequently, layoffs from Covid-19 and current layoffs playing out all over the country, financial planner Vincent Grosso of Pascack Capital says now is a good time to consolidate multiple retirement accounts you may have from previous jobs.
This step can help you simplify your finances by moving all investments to a single place, and you can consolidate several into a new brokerage firm that may have lower fees or better investment choices.
If you want help consolidating old 401(k) accounts, a financial advisor can assist you through the process. However, you can also roll over your old retirement accounts to a new IRA yourself with brokerage firms like Vanguard and Fidelity.
Related: Just got your tax refund? Here are 7 smart things you can do with it
Create a plan for your debt
Interest rates have been inching higher for more than a year, which is yet another reason you should take stock of your debt levels and look for a solution. If you have credit card debt with anywhere close to average APR of 20.56%, taking a few simple steps can help you save money, pay down debt faster or both.
Financial planner Jordan Taylor of Core Planning says high interest credit card debt can easily cost you two to three times the amount you originally borrowed, and that consolidating debt could get you a lower interest rate, a better monthly payment or all of the above.
While using a personal loan to consolidate debt can help you secure a fixed interest rate and fixed monthly payment, you can also look into balance transfer credit cards like the Citi® Diamond Preferred® Card. This card currently offers a 0% introductory APR on balance transfers for 21 months (17.99% to 28.74% variable afterward). Transfers must be made in the first four months from account opening to qualify for this rate.
Check your credit reports for errors
Your credit score is a crucial component of your credit health, and your credit reports are the one place you can spot potential problems (or even errors) early on. That’s why Sam Weisfeld, managing editor at FinImpact, says it’s crucial to check your credit reports for errors at least a few times per year.
Fortunately, you can check your credit reports with all three credit bureaus — Experian, Equifax or TransUnion — for free once per week this spring (or anytime throughout the year) at annualcreditreport.com. Doing so can help you find errors that may be hurting your score through no fault of your own, or even some of the earliest signs of identity theft. And don’t worry, it doesn’t hurt your credit score when you check your credit.
If you find errors or incorrect information on your credit reports, you’ll want to follow the Federal Trade Commission (FTC) guidelines on disputing these issues right away.
According to the Consumer Financial Protection Bureau (CFPB), some of the most common credit report errors to look for include incorrect balances, falsely reported late payments, accounts you don’t recognize, accounts reported open that are actually closed and accounts listed more than once.
Related: What’s a good credit score?
Spring is here, and it’s a great time to refresh your finances. The steps outlined here can help you get a head start, and that’s true whether you’re new to personal finance or you always have your head in a finance book.
Don’t wait another year to get your money organized, and your future self will thank you.
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