As the weather finally moves to warmer temperatures, thoughts often turn towards getting one's house in order. Cleaning out the cupboards, taking stock of items that need to be retired or repaired, and outright purging in some cases, is often what is done as the weather changes. And while it's common to want to get your house in order, it's not so common to do the same with your finances. For as much as an assessment of your current living situation is important, equally so is a review of your financial situation as well.
Taking time this spring to get your house and finances in order will benefit you and your family in the long run. Following are 10 tips for spring cleaning your finances.
1. Take Stock. Now's the time to take a long hard look at your where your money resides, and what it's doing for you. Ask yourselves the following questions and make sure you're able to find the answers: What do I have? Where are my investments? What investments are making money for me and my family, and what ones are not? How are my funds dispersed? At the end of the day, you want to make sure that you're getting the most "bang" for your buck so make sure to find out all of the details regarding your money so that you can determine if there needs to be any changes made.
2. Review Your Budget. Do you have a budget and if so, do you stick to it every week? If the answer is "no," you're not alone. If the answer is "yes," it's always good to prioritize the time required to find out where your money is going to every month. How family dollars are being spent is a key part of getting your finances in order.
3. Credit Where Credit is Due. Do you know what's on your credit report? Did you know that one incorrect or negative item can make a considerable difference in how much money a bank could lend you, or whether you get a preferred rate on a loan or credit card? Order your credit report and get down to business -- is everything correct? Are there mistakes? Are outstanding items still appearing, e.g. bankruptcy, etc.? Find out what's said about you financially and make sure that there are no costly mistakes listed.
4. Commit to Saving More. It may seem difficult to do but taking stock of the amount of money being saved per year then committing to saving just a little bit more will make the world of difference to your finances of the future. Double check the amount of money in your emergency fund and/or savings account and commit to increasing it by a small percentage per year. An incidental amount that won't be missed in the short term can make a considerable difference towards your long-term retirement funds.
5. Automate. If you haven't already, get online and automate your monthly payments, wherever possible. Doing so will saves you the worry about paying your bills on time and will allows you to keep track of your debits and credits easily.
6. Pay it Down. Make a plan to reduce or eliminate your debt altogether for the coming year. This will need to be done by taking a long hard look at how money is spent and coming up with a plan for how you can effectively pay off money owed while still saving. Though it may seem counter-intuitive at first, it is possible, and will ultimately result in your having more disposable income to reinvest.
7. Better Safe Than Sorry. Do you have a place for your important documents? Outside of your home, are there backup documents elsewhere, such as in a safety deposit box or digital backups in a Cloud-based account? If not, it's important to do so right away as we can never be sure of when a situation may occur where important information is, unfortunately, lost or destroyed. Having a back up plan doesn't have to be complicated. Options for doing so include giving copies of important information to a trusted friend or family member to store in another location, or providing copies to your lawyer.
8. It Will Be Done. They say that there is nothing certain in life but death and taxes, and this is found to be no more true than when a loved on dies. As part of your financial spring cleaning, make sure to get your will in order so that there are no surprises or disputes in the event of an untimely death. Details regarding your kids' guardianship, allocations of funds and related items should be clearly outlined in this important document.
9. Review Your Contracts. Take this time to review your supplier and vendor contracts such as your phone/TV and internet service providers. Take this time to review your contracts and ask your suppliers for a better rate or package.
10. Insure and Ensure Your Future. Do you understand all of the details of your insurance policy? How much are you paying, and what will you or your loved ones receive, in the event that insurance funds are required? Take this time of the year to review all policies, including Life Insurance, Home and Auto Insurance to confirm that you have the best policy and rates that suit your particular family situation.
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