Spring is a time of renewal. That goes for your finances as well. Now is a good time to evaluate things and make any necessary changes.
It was a long, cold winter for most of us. I think Boston is still digging out. I have even seen the rogue trash covered snow pile here in New York City and it’s April. So maybe you stayed in, refusing to socialize and saved money. Or maybe you stayed inside ordering Seamless and buying stuff on Amazon and spent money. You might even be one of those weirdos who loves winter and spent lots of money doing snow related things like skiing and snowboarding.
Whatever your winter personality, the change of seasons is a good time to look at your finances and see if you need to make any changes or adjustments.
Note Any Changes
Did you get a raise, have a kid, move into a more expensive place? If you didn’t make adjustments in your budget at the time of the change, you need to address it now.
If you are on the happy side of the equation, make sure that your additional income doesn’t cause lifestyle inflation. Just because you have more money doesn’t mean you should upgrade every facet of life, bigger house, newer car, nicer clothes. Treat yourself, a well deserved vacation, a fancy dinner, and then invest the rest of that additional money.
If you’ve found yourself with less money, where did it go? Was it a major life event like a new baby or a job loss or was it just due to mindless spending? This is where Mint is your best friend. Carefully comb through at least a month’s worth of transactions and find out where your leaks are springing from.
If it was due to a big life change, the lost money needs to come from somewhere. Cut back on discretionary spending, take on overtime at work, get a part time job. It’s easier to cut back but it’s faster to bring in extra money.
Clean It Out
Spring cleaning your home can help you spring clean your finances too. Go through all of your closets, basement, attic, garage, and see what you can sell. If you live in a suburban area, have a garage sale. Maybe organize one for your whole block.
If you’re in a city or the country, you can sell your items on-line through Amazon, eBay, or Craigslist. At the very least, donate your extra stuff and get a receipt for a possible tax deduction.
Getting rid of stuff can have unexpected benefits. Yes you can get money by selling it but there is a psychological boost to having less stuff. It makes your mind feel clearer, it makes you feel physically lighter somehow. And if you have less stuff, maybe you don’t need to live in such a big place. By downgrading to something smaller, you’ll have even more money.
Check Your Investments
We emphasize buy and hold and set it and forget it at LMM. Poking and prodding your investments all the time is bad for your bottom line and bad for your mental health. There are more interesting things than money you can spend your time thinking about and tinkering with. But that doesn’t mean it’s not a good idea to check in periodically.
Do you have a bunch of retirement accounts from former jobs hanging around? See if it’s possible to consolidate them into one so they’re easier to monitor. Are you nearing retirement age? The closer you are, the more conservative your portfolio should be. It might be time to rebalance.
Check your fees! We recently did an episode about investment fees. Americans spend over $6 billion a year on these fees. That is a lot of money not in your pocket. FeeX can help you find and eliminate them.
How much paper work is lurking in your home? How much of it is necessary? Probably less than you have squirled away. This is a guide to what to keep and for how long. And just because you need to keep it doesn’t mean it has to be in paper form.
You can just scan the important documents into your computer and create digital files. Some things like birth certificates do need to be kept in paper form though.
Assess Your Goals
Do you want to go on vacation, get married, buy a home? It’s not enough to simply want these things. You need to plan to get there. Put a time frame on your goals. If you want to buy a home in the next five years, how much do you have to save per year to accumulate the down payment?
If you want to go on vacation, set up an alert on something like Airfarewatchdog so you can see when ticket prices drop and pull the trigger.
Choose A Debt
I hope you are debt free. But many of us are not. Hopefully you are chiseling away at your debts. But pick up the sledge hammer for just one. Choose something that seems like it’s been hanging around forever and just grit your teeth and get rid of it.
We advocate the stack method over the snowball method but there is undeniably something satisfying about killing off a payment that has been haunting your for a long time. So before you bust out the swim wear, kill one debt and then go back to stacking.
Summer Is Near
Summer is my favorite time of year, sun, the beach, picnics, hiking, barbecues, the Tour de France. I don’t want to think about money when I could be soaking up some much missed Vitamin D in the park. But I don’t want anxiety about money hovering over my fun either.
By having a look in twice a year, once in the fall and once in the spring, you can tighten up your finances so you can concentrate on life’s pleasures the rest of the year.