Spring is in the air! It's the season of renewal, and while you're decluttering your home, why not give your finances a refreshing spring clean, too? Just like a good scrub can revitalize your living space, a financial spring cleaning can bring new life to your savings and set you up for a brighter financial future.
Our finances can easily become routine. It’s important to set aside time each year to review your savings plans and goals, even if, on the surface, everything seems to be going well. Over time, things change that can impact our finances – the increased cost of items you buy regularly, a change in job or salary, paying off a loan, all of these situations and more can change the amount you’re saving or are able to save. If it’s been a while since you’ve given your savings a good, hard look, then start this spring and make it an annual habit!
Not sure how to get started? Here’s how to spring-clean your savings in five easy steps.
Take a Financial Inventory: Assess your saving habits
First, take a realistic look at your current savings. How much are you putting into savings each month? Consider both your short-term and long-term savings goals, the timelines for each, and if you’re on track to achieve them. If it looks like you might fall short of your goals, then it's time to make adjustments. Consider increasing the amount you’re saving each month. If you need to set aside more of your monthly income toward savings, look for ways to cut back on your spending – things like buying coffee at the local shop instead of making it at home, eating out instead of planning meals at home, and any unused streaming subscriptions that can hide out in your automatic payments. Small changes can make a big difference over time.
Consolidate and Simplify: Streamline Your Finances
Next, it's time to streamline. If you have multiple savings accounts, retirement accounts, or investment accounts, it can be hard to keep track of your total savings. Consolidating these accounts can simplify financial management and reduce the organizational workload, making tracking your savings less daunting. Make sure to evaluate the fees, interest rates, and other characteristics of your various accounts before making any changes to ensure they meet your long-term financial needs.
Reevaluate your financial goals
Clear goals are the driving force behind effective savings habits. Take a minute to re-evaluate your financial goals. What are your long-term and short-term financial objectives? Are the goals you were previously working towards still relevant? It's okay to adjust or set new goals. Think about future wants and needs, as well as small pleasures you’d love to enjoy in a few years or even in a few months. For each goal, calculate how much you would need to save overall, and then break it down into monthly amounts so you can stay on target.
Make it Effortless: Automate your Savings
Once your financial goals are clearly redefined, automate your savings process. Adjust your payroll direct deposit with your employer to ensure a portion of your paycheck goes directly into your savings account, or establish regular transfers from your checking account to your savings account(s). This strategy helps eliminate the urge to skip saving for a month to indulge or to forget. You may find that you hardly notice the absence of that money in your checking account when it’s automatically transferred to your savings.
Leverage Technology: Use an App
Technology can be a valuable partner in managing your finances. Discover the variety of money management apps available to find one that suits your unique financial requirements. Budgeting apps can assist you in monitoring savings, analyzing spending patterns, and maintaining your budget consistently. Savings apps offer features like rounding up purchases to save spare change, and some even create investment portfolios with that change, simplifying the investment process. Embracing digital tools for your savings goals can enhance and enliven your personal finance journey.
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