With spring finally here, there’s no better time to “clean house” financially – while keeping an organized budget is important all year round, take a few minutes today to get your ducks in a row and do some spring cleaning!
Assess the Mess
When tidying up any mess, the first step is to evaluate what needs organizing; take a good look at your expenses and your income to see where your money is currently going. One of my favorite ways to do this is simply by scrolling through your online bank accounts by transaction – from there, put your expenses into a spreadsheet, and categorize each expense. Color coding, charts, and simple formulas can help to easily organize all your expenses in one place.
Another easy way to track your expenses is through an app; my favorites are Mint and Personal Capital, but there are tons out there that will help you to get organized. These apps link to your bank accounts and automatically categorize your expenses, but you also have the ability to relocate them – if the app assumes you went to 7/11 for food but you really bought gas there, you can move any purchase to the appropriate category.
Now that you have a better idea of where your money is going, it’s time to set a budget going forward. I find that the easiest way to do this is by month since most bills are paid this way already, but break it down in a way that works for you. By looking at your current expenses, you can get a pretty good idea of what you spend on certain categories each month; if you spent between $100 and $120 on gas the last few months consistently, setting your budget in that range makes sense going forward.
The next step is considering the areas where you can cut back; if you’ve been eating out a lot and are not happy with the amount you’ve been spending on food, then set your budget for the next month with the intention of cooking at home more often. A lot of people get extreme with their budgets, but I find that moderation is key here. Be honest with yourself; if you know you have a couple of birthday dinners to attend then plan for that, but focus instead on packing a lunch rather than eating out during the week. A budget only works if you stick to it, so setting realistic goals is the key to success.
Now that you’ve made a plan for your expenses, take a look at what you own that you may not need anymore. If you have clothes, sporting equipment, or furniture that is gathering dust, consider selling them; the extra cash can help you pay down debt, and the extra room in your home is always a plus. If your garage is full of unwanted items, a garage sale can help you to declutter and bring in some extra money.
For homeowners, keeping your house in good condition means keeping your property value up over time. For renters, spring cleaning could mean the difference between getting your security deposit back or losing out on that money when it comes time to move. Check on local deals for things like carpet cleaning and window washing or do it the old-fashioned way with some elbow grease, but physically cleaning your space always pays off, both in dollars and in my case, sanity.
Another great way to save money without a lot of effort is to take a look at your bills and utilities to see where there is potential for savings. A lot of utility companies offer low-income programs or discounts for energy-saving appliances. Check each of your monthly bills and find out where you can save a couple of bucks; last year we bundled our homeowners’ insurance with our car insurance policies and saved a ton of money. Taking a look at these “locked-in” expenses can help you to free up some extra cash, so it’s worth it to spend a little time once a year to review whether you’re getting the best deals.
Last but not least, look at any refinancing or consolidation options out there for your debt; any money you can save in interest over time is going to help you, and lower monthly payments can make it easier to pay off your loans by enabling you to put more towards the principal. With so many options available online now, this step could only take a matter of minutes and save you hundreds or thousands of dollars in the long run, so set some time aside to take a look at options you may not have considered before.
Taking a little time once a year to get your financial house in order can help you stay organized throughout the year, and will hopefully encourage you to do so more often. Finding ways to save can be immensely rewarding, and feeling on top of your finances does wonders for your confidence. So get in there, brush off the dust, and enjoy the benefits of your spring cleaning throughout the year!