You wouldn’t know it if you live in the path of the recent Nor’easter, but Spring has sprung! And with the promised sunshine on the way, what better time to start reviewing your finances so that you'll be set for the rest of the year.
The warmer weather will have you ready to head to brunches, happy hours, and maybe even a shopping trip or two (or four), but wait! Before you start spending, you should take a step back to see a big picture of your finances.
Keep reading to learn five things you can do TODAY (without spending a dime) to get control of your finances.
Create a Budget.
I know. We all know. No one wants to make a budget. But if you don’t know where your money is going, how can you figure out how much is left over to spend on things you love? Instead of thinking of a budget as a restrictive chore, try thinking of it more like a spending plan.
At first the idea is less about giving every dollar a place (eventually we will get there) and more about finding out where all of your dollars are currently going. I find it surprising how many people think they’re broke and are shocked when a simple spreadsheet shows them just how much they're really spending on small purchases that quickly add up.
Determine How Much Debt You Have.
You can’t get a handle on how much you owe if you don’t take a hard look at every card and line of credit. Even if you aren’t ready to tackle it with force you will at least have an idea of what’s laying in front of you. Maybe there's a small debt that you can pay off quickly or some inaccurate charges that you can address before you really get serious about tackling debt. But none of these can happen until you first know where you stand financially.
You can start by checking your credit report at www.freecreditreport.com or downloading an app that provides similar information plus your credit score such as Nerd Wallet, Credit Karma or Credit Sesame.
Pay Your Taxes.
Taxes are a legal requirement that comes with making money and filing them completely and on time is the best way to avoid penalties. The IRS wants their money by April 17th but if you don’t think you’ll have your affairs in order by then, you can file an extension for free at https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return. If you're ready but think you’ll owe, FILE YOUR TAX RETURN ANYWAY. You can apply for a payment plan and the penalties are far less than if you skip filing altogether.
All taxpayers should do some research to make sure they are claiming all credits and deductions they are entitled to. We can’t escape taxes so we might as well pay them on time and in full, as much as you legally owe, and not a dollar more.
Do an Insurance Check-up.
Bought a house? Added a spouse? If you had some major life changes in the past few years without a change to your insurance coverage, it is time to reassess. Make sure your homeowner's policy is up to date and reflects any large purchases that may need their own special insurance. In addition, check the beneficiaries on your insurance policies and retirement accounts to ensure proper people are in place to receive funds.
It’s not always easy to find extra funds to put away but it is important. It may not seem like much but if you can afford to put away $50 from each paycheck that’s over $1000 that you have available for emergencies by the end of the year. And if you don’t have $50, what about $25 Don’t have $25? Maybe you have a bonus or tax refund that you can plan to split between spending and saving.
The point is to start where you are and do what you can now so that you have a safety net ready before the need for one shows up when you least expect it. If you do have money to set aside out of your regular paycheck, automate your savings by having a direct deposit that arrives in your account without your interference. Doing so helps you not have to feel like you’re “losing” money when you have to make a manual transfer out of your checking account.
"Five Ways to Spring Clean Your Finances" was originally posted on cityfitgirls.com
DISCLAIMER: I am an accountant, not your accountant. Please speak with a professional about your specific accounting and tax needs before putting any of the aforementioned tips into practice.