Since the first part of 2020 doesn’t “really” count because everyone was in stalemate (thank you Covid-19), we can basically start over now as the country starts to slowly reopen. So, welcome everyone. Spring has sprung! 🙂 It’s officially the season of cleaning, organizing, and working through all the build-up winter brings.
Here at FirstLine, we’re less concerned about your closet and more concerned about Marie Kondo-ing your finances. Yes! We’re giving you permission to take a break from sorting piles of never-worn clothes and take a swing at tidying up your finances.
We’re going to keep this simple, so you can get back to doing your thing. Here are 7 steps to spring clean your finances and set yourself up for success the rest of the year.
- CLEAN UP + CONSOLIDATE
You’ve been doing this money-thing for a while now, so it’s likely you’ve seen career changes, moves, credit cards come and go, and maybe even a few different banks.
Now’s a great time to clean up your accounts and consolidate where possible. A few things to track down and clean up include:
- Bank accounts: If you have accounts open at multiple banks due to “testing them out,” you might want to consider moving them all to a bank with great interest rates and financial tools you trust.
- Retirement accounts: If you’ve switched jobs and left 401(k)s or other retirement accounts behind, consider rolling them into an IRA and getting your money into one place.
- Credit cards: We get it—opening new credit cards to snag sweet deals and build points is enticing. But if you’re not currently using those cards, it might be time to say goodbye. (Sometimes closing cards can negatively impact your credit score, here’s some more info on that.) But if you don’t foresee relying on your credit score for big purchases like a home or car in the near future, it would be smart to close some cards.
- REVIEW + RENEW YOUR BUDGET
Expenses change over the years, especially if you add new members to the family, send a child off to college, buy a home, or retire. On the flipside, income can change too.
Setting and following a budget is a key piece to a strong, strategic financial plan. So when things change, it’s important to give your old budget a facelift. You don’t have to do anything crazy, simply re-evaluate your spending and income, and adjust where necessary.
- TIDY UP PAPERWORK
You know who loves paperwork? No one. Which is reason enough to go through your filing drawers and get rid of un-needed paperwork taking up space.
First, gather all your paperwork in one place. Then, decide what should stay and what can go. A general rule of thumb is keeping tax- and business-related paperwork for at least 7 years. When it’s time to toss, use a shredder to protect your safety and avoid identity theft.
Everything that stays should be scanned and stored electronically not just for protection purposes, but to help your newly-organized filing drawers stay that way.
- AUTOMATE EVERYTHING
We’re firm believers that simplicity is key, especially when it comes to money management. And nothing makes life simpler than automation. Thank you technology gods!
If you haven’t already, you’ll want to automate the following:
- Deposits into your savings, retirement, and investment accounts
- Any recurring bills: utilities, phone, rent, cable, car, etc.
- Loan payments
Set it and forget (until next year’s cleaning)!
- PLAY CATCH-UP
Late payments happen. Sometimes life throws curveballs that set us back and sometimes, we simply forget or get lazy.
Now is a great time to catch up on any bills or debts you’re behind on. If you’ve stopped paying on certain debts, it’s time to make a plan and get those taken care of.
Feeling a bit behind and don’t have the funds to do so? #6 is for you!
- INCREASE CASH FLOW
Cutting back isn’t always possible, especially if you’re already living and spending minimally. However, there’s endless ways to increase your cash flow and find a little extra money to help pay off debts and expenses.
A few ideas include:
- Have a yard sale! If you’ve been busy spring cleaning your home and closet, you probably have plenty you no longer need. Donating is great, but yard sales, consignment stores, and selling sites are an easy way to make extra cash.
- Snag a part-time gig. Whether it’s waitressing, dog-walking, Uber-ing, or tutoring, part-time jobs are awesome opportunities to save up money and improve your financial situation.
- Rent out your extra space. Homeowners with a little extra space can make quite a bit of money renting it out to travelers through sites like Airbnb.
- PLAN FOR YOUR FUTURE
Now that your finances are refreshed and sparkling, it’s important you set your future-self up for success. Whether you’re planning for retirement, a baby, a move, or simply a much-needed vacation, financial goals take time and strategy.
Spend time mapping out your goals and needs over the next year and into the future. Decide what you’ll need to do to get there and create a plan you can stick with.
Even better? Consult with a financial advisor and don’t go it alone. It’s like mom always said, “Cleaning is faster when everyone pitches in.” We’re here to pitch in, and we just so happen to like these chores—so give us a ring and let’s make future you proud.
For more tools and resources to get your financial life in pristine condition, head on over to our blog or call us to chat. We may not be Marie Kondo, but we know a thing or two about money and we’re happy to share.