March has finally arrived, which means winter is over and spring has sprung, and the annual tradition of spring cleaning begins. It not only refers to the act of housecleaning but metaphorically as well, like getting our finances in order before an audit or inspection occurs.

Many of us have questionable financial habits ranging from bad to worse, and this is the perfect time to turn over a new leaf and make a change.

Creating the type of lifestyle we want necessitates discipline and cautious planning. This way, the state of our finances won’t drift into chaos.

Springtime is the most suitable time to update our present routine. It is the perfect opportunity to adopt a new behavior that will fit our lifestyle. Create a solid financial plan that will help in establishing long-term financial success.

Here are ten ways to clean our finances efficiently and effectively:

1. Get rid of our old stuff – This can refer to both literal and metaphorical acts, which we can do at the same time. All of us, knowingly and unknowingly, collect and accumulate things in our lifetimes. It slowly fills up the empty spaces in our homes, occupations, and lives, oftentimes leaving us perplexed and discombobulated. We end up shuffling them around in an ill-fated attempt to clean up.
   Shuffling things around will make everything worse, piling them together and ending up in a large, useless pile. The cure for this is decluttering or putting everything in order. In our personal and professional lives, go through every space with a fine-tooth comb. The useless stuff we can either dispose of, sell, or give away.
   Separate the things into three piles: for selling, for donating, and for the garbage. In these modern times, there are many options to do all of these, and particular venues are available at a push of a button, making it relatively easy.
2. Examine our monthly budget – Budgeting entails sacrificing and giving up all the comforts we enjoy and yet that is one way to look at it. After all, it is not supposed to be convenient to accumulate wealth. And if it were, everyone would save more and spend less.
   Instead of looking at it in terms of sacrifice, think of it as prioritization and creating a perfect life based on importance and priorities. For instance, rather than spending two years saving for a downpayment to purchase a home, we could do it by cutting back five hundred to one thousand dollars in monthly expenses.
   We should stick to our priorities and ask ourselves: should we spend one hundred dollars per month on saving for a downpayment or cable TV? The same goes for spending on new gadgets, clothes, eating out at restaurants, and other frivolous expenditures. Even essential expenses like rent and food should be put under a microscope.
3. Make sure our financial paperwork is clean – Filing cabinets are remnants of the past and deemed unnecessary in this day and age, where files are kept digitally. You also need to back up the important documents through two systems, via an external hard drive and an automated cloud backup service that constantly upload files for more safe off-site storage. This way, we won’t lose documents of critical value.
   Having all files in digital format enables them to be more organized and thus reduce clutter. For original documents in a paper format like birth certificates, land titles, etc., which we are unable to part with, store them in a fireproof safe. If other documents aren’t valuable enough to put in the safe, we can transfer them to the digital medium and file them away.
   Lastly, make it a habit to dispose of unnecessary personal or financial documents properly by shredding them to avoid identity theft.
4. Check on the progress of our financial goals for the year – Setting up financial goals (short-term, mid-term, and long-term) for the start of the year will benefit us in the long run.
   A short-term goal should be set to finish by the end of the year, a mid-term goal in two to five years, and a long term-goal in ten years. We should also ask ourselves: do we have enough money for the emergency fund? Are we carrying any credit card balances and paying high-interest rates? Are we placing more than enough money towards tax-advantaged retirement accounts as we prefer?
   Financial spring cleaning provides an opportune time to check on our progress. We can adjust and tweak our savings, spending, and investments, this way, we can put ourselves on the right track to achieve our financial goals.
5. Planning our retirement contributions – Since April is usually the tax deadline, spring also means tax season. Now is the time to decide to whether put it behind for next year or finish it.
   During this time, we might be receiving a tax refund or preparing to pay a tax bill. We have to make sure we can determine how to cover the cost of an IRS payment plan, credit, debit, or a paper check, or be able to know to use a cash windfall. We should know what to do with a tax refund if we indeed get one. We can use it to establish an emergency fund or a savings goal.
   April 18 is the deadline for tax filing, and it is fast approaching, so we need to do them at the earliest and most convenient time.
6. Preparing our summer budget – Summer is inching towards realization, and we might want a much-needed vacation away from the hustle and bustle of work. Rather than waiting for it to arrive in June, we might need to prepare our summer budget this early. This way, we can get ahead of the game and get the most bang for our buck.
   We must allocate more money towards this goal months in advance so we won’t miss out because our spending might not allow it. We should also think about budgeting for smaller stuff that we might buy, like bug spray, sunscreen, sunglasses, beach towels, and snacks.
   And when we make these purchases, we should use credit cards that can provide travel rewards and cashback for our spending.
7. Reviewing our life and health insurance policies – Our life and health insurance policies evolve as we get older. We will need more life insurance if we have spouses and children than unmarried people living alone. We can talk to financial advisers or insurance salesmen for this particular query, which Jojo Alamillo can fully provide.
   Similarly, we need different health insurance at various phases of our lives. If our jobs don’t provide for it, we have other alternatives for health insurance without employer benefits.
8. Canceling unnecessary or unused subscriptions – An average household has additional bills to consider (aside from water and electricity) like WiFi, cable TV, video streaming services, gym memberships, etc. These might get us in financial turmoil and unable to pay for the more essential things our family needs.
   We should list down all subscriptions we pay for, either annually or monthly, and we might even find out we pay more than we think. After doing this, we should ask ourselves this question: Do I use this service many times a week and does it make my life better?
   For instance, if we have been to the gym more than ten times in the last month, it will justify keeping this membership, but if we have only been there once or twice, then we should cancel it. Instead, we should think about switching to a home workout routine, which has no cost.
9. Budgeting and planning for irregular expenses – We don’t usually forget to budget for mortgage or rent payments. However, we tend to forget to budget for birthdays, weddings, holiday gifts, etc.
   Even though these expenses won’t appear every month, this doesn’t mean they don’t cost money and use up our budgets. We should set aside money in a high-yield savings account and earmark it for irregular expenses.
   We should also budget for travel expenses since we usually vacation at least once a year.
   We should plan on spending on these and other irregular expenses for the year and reserve money accordingly.
10. Automating our savings – One option to automate our savings is to split our direct deposit to go into not only a checking account, but an investment or savings account.
    We can also set up automated recurring transfers to happen every payday. For instance, if we want to pay off our mortgages early, we can arrange our mortgage payment to automatically go out every month and pay more than the minimum payment.
    By automating beneficial behaviors like saving money, we can make sure they will happen. It also provides a great way to trick ourselves into saving more because it removes the temptation of spending unnecessarily. With less money coming to us from our checking accounts, we simply adapt to spending less.

Conclusion

A clean house and clean finances are what we all hope for and these won’t happen by mistake. These will only happen if we make them happen.

As time goes by, our needs will change as our short and mid-term goals change. Oftentimes, we might even need to take a second look at our long-term goals to make sure they represent our ideal lifestyles.

This spring, we should set aside some time to review our finances and fine-tune them if necessary. Email us at sales@ascend99.com if you’re interested.