Spring is in the air, the birds are singing, the days are getting longer and we start to feel that renewal of summer energy and positivity.
A spring clean tends to make its way to the top of our to do lists. A fundamental aspect of this tends to be forgotten. Taking our “Clorox” cloth and dusting up our finances.
Here are 5 must dos to get our finances sparkly clean and ready for a summer of wealth building.
Get the money energy flowing
Winter can turn into a time of hoarding. That lack of Vitamin D to keep our spirits lifted gets replaced with shopping, staying inside and building up a lot of clutter.
We end up accumulating a lot of things that are trapping our money energy. Time to shake it out and get that money moving. Literally.
Clean out the real clutter. The old, unworn clothes and other unneeded “stuff” we can sell or give to charity, the stack of books we read over winter and importantly those financial documents, banks statements, credit card statements and bills that can be filed, ideally electronically to further eliminate paper clutter and make them easier to find.
Don’t forget to shred documents that contain financial data to prevent these landing up in the wrong hands.
Check your financial goals for the year
Circumstances may have changed that have impacted your goals positively or negatively.
Take this spring clean as the opportunity for resetting your goals, realigning them with your life plan and reigniting your excitement about them.
This is a good opportunity to make sure you have set realistic goals that are meaningful to you and continue to energise you when you think about working towards them.
Update your financial Position
Confirm the savings amounts you have, your retirement account balances and the value of any other investments you hold.
Check the rates of interest and return you have received over the year and the costs that you have incurred on these accounts.
Question your providers, research alternatives and ask advisors to ensure you are getting the best out of your money.
Don’t be a shrinking violet or let fear, insecurity or doubt hold you back. Remember this is your money and you want it to work as hard as possible to build towards your goals.
Create a schedule of all the debts you owe and confirm you are on track for paying them back as you had planned. Check the rates of interest you are being charged and renegotiate rates where you are able.
High interest charges on your credit card balance are a good place to start either by direct negotiation with your provider or investigating transferring the balance to a nil rate credit card, assuming you are 100% sure you can get the balances repaid within the interest free period.
The difference between your Assets and your debts is your net worth.
This is a key number to track as it is the milestone marker to your financial freedom and the wider your gap gets between the growth in your assets and the shrinking of your debt, the harder your money is working.
Polish up your cashflows
Analyse where your money has been going over the last year by taking a look at your bank and credit card statements.
Identify those expenses you can eliminate, those that you cannot eliminate but can potentially renegotiate and those that may not be appearing in your past spending but may be doing so in the future. A planned car purchase, possibly on your goal list, will also bring along a number of new expenses for example.
Rework your budget
Armed with clarity on your net worth and the knowledge around what your money is up to, create a budget that works towards decreasing your spending and debts and increasing your assets.
Set yourself up for success by automating your cashflows.