As the snow melts and the winter blues fade away, we welcome the colours and sights of spring. Spring represents newness of life, with the leaves starting to form and the flowers beginning to bloom. It can feel like a fresh start. Yet the openness and excitement of this new season also brings with it a laundry list of spring-cleaning tasks and items that require our attention.
What typically misses this list is our finances. Don’t they deserve a little sprucing-up too? It’s so common to set New Year’s resolutions and then life gets in the way. We then forget to clean the cobwebs and dust around our well-intentioned financial goals, so that we can see them more clearly and get back to working towards them. It’s time for a new spring-cleaning routine this year, so why not try these helpful tips to spring clean your finances:
1. Clean your financial house
You won’t know what rooms you need to clean unless you have a picture of your financial house. Having a clear picture of your finances allows you to easily identify any gaps or areas that you wish to address. First things first: create a list of all your chequing accounts, savings accounts, investments, and debts. Take note of the balances for each as well as the interest rates or rates of return. Is your emergency fund up to par? Have you made any progress on those debt repayment goals? Use this view to decide what financial goals you will focus on in the coming months and then create a plan that will get you there.
2. Paper purge
Have a mound of paper bills that are creating a mess? This is the perfect time to file and organize your bills or statements. Create a filing system for each of your paper documents and either save them or purge them. These days most of our bills and statements can be accessed online, so if you don’t need to keep the paper copy, shred it and declutter your space and mind. If you do need to keep certain paper documents, get into the habit of filing them as soon as you receive them or at least once a month to avoid the paper mound from growing all over again. This is also a great time to switch to online statements for accounts that you no longer wish to receive a paper bill for – which will make spring cleaning much easier come next year.
3. Buff your budget
How’s that budget going? Have you been sticking to it, or is it non-existent? Now that you have a clear picture of your financial house and you’ve set some new financial goals, you should review your budget and adjust your spending to reach these goals. If you have not created a budgeting system, now is the perfect time. Tracking your money is the foundation to achieving your financial goals – there is no other way. Saying that it’s too hard or too complicated is only going to create more financial mess that will be much harder to clean in the future.
4. Brush your debts off
Are your debts collecting dust? That dust comes with a hefty price, as each month you are accumulating interest that will push your debt-free dreams further away. A dream without a plan is only a wish, and with your renewed financial focus, this is the perfect time to create a debt repayment plan to make those dreams a reality. There are two ways to do this – using the Debt Snowball or the Debt Avalanche approach. Either approach works and there is no right or wrong; it’s simply based on what method you will commit to. The Debt Snowball approach recommends focusing on the debt with the smallest balance first and paying as much as you can to this debt while paying the minimums on all other debts. The rationale behind the Snowball method is that you will be motivated to stick to the overall plan as you see one of your debts paid off faster. The Debt Avalanche approach recommends focusing on the debt with the highest interest rate first. The Avalanche method allows you to pay less interest over time and potentially become debt-free sooner, if you stick to the plan.
5. Spruce up your savings
Are your savings goals blossoming, or are they collecting weeds and withering away? Most people think you need a lot of money to start saving or investing. Saving is simply the act of putting money away; even $1 a month still counts. The key to saving is to start where you are. Once you have buffed your budget and created a plan for your debts, you should be able to clearly see how much money you have remaining each month for your savings goals. Get into the habit of putting a set amount aside each month, and once you have built up this habit you can increase the amount over time. The habit is the key. One easy way to do this is to set up an automatic savings plan where the money is automatically transferred into your savings account each time you get paid. It’s the tried and true “set it and forget it” approach. This ensures your money is saved before paying bills and other wants of life. The truth is that it’s not difficult to save; we’ve just created this habit of waiting until the end of the month to see if we have any money left to save. Making your savings goals a priority means paying yourself first.
Use these tips to declutter and create more space and peace of mind with your finances. Financial clarity and control are within your reach. It starts with cleaning up your financial house and then becoming committed to keeping it clean, every step of the way until your financial goals are achieved.
Vanessa Bowen is a Chartered Professional Accountant (CPA) and Master Neuro-Linguistic Programming Practitioner (NLP) and the Founder of
Mint Worthy , a personal finance coaching platform that helps women shift their relationship with money and take control of their finances.