Ah Spring. What an optimistic time of year. Trees are budding, sun is shining through your windows (oh, maybe it’s time to clean those) and the air smells fresh and green. It’s the traditional time of year to clean up, clean up. As you throw open your doors and widows, move the furniture and polish everything to bright and shiny, cast your eye over your money and clean up the clutter and disarray that may have gathered there too.
It’s easy to accumulate a lot of junk in the junk drawer… and a lot of silly spending in a budget. Just as you’d dump the stuff out of the drawer and decide what should be there and shouldn’t be, take a look at your financials to see what needs some attention.
Regular costs have a tendency to creep up. Some we have little control over – really, another hike in hydro rates? Some we can rein in: think cable, cell phone, grocery bills. Go over your budget and look at how your spending has changed in the last six months. Has a $45 bill climbed to $55 or even $60? Are there services you’re paying for that you seldom actually use? Trim back what you’re spending and pour that money on your most expensive debt or into your emergency fund. Or pile it up for that trip you’ve been longing to take. Throw out the garbage spending. You know that gym membership you never use? Get rid of it. And the magazines that pile up in the corner? Cancel the subscriptions.
Has anything changed in your life in the last year? Getting married is a big deal. So is having kids, changing jobs, becoming unemployed or getting sick. Retirement’s a biggie too. Each time you experience a change in your life circumstances, you have to adjust your financial plan to reflect what’s new. Has your income changed? Do you have different priorities? How have you adjusted what you’re doing with your money to reflect what you’re doing in your life?
You know that will you swore you’d put in place before the end of last year? Pretty lucky you didn’t die, right? While you’re at it, get your powers of attorney done too so that if you become a drooling fool someone can take care of you and your money properly.
Debt is like a spider… leave it to its own devices and you’ll have webs all over the house. And if you ignore your debt, it’ll just keep growing. Can’t even imagine being debt free? You can be… if you’re brave enough and determined enough.
Toss the excess paperwork. Do you really need the phone bills for 2010? Deciding what to keep and what to toss boils down to a couple of things:
- Am I likely to need this again as a reference?
- And am I obliged to hang onto this piece of paper just in case someone official starts asking questions?
If the answer is yes to either one the item gets filed. No and that paperwork joins the ranks of the recycled.
Take inventory of what you have. That means making or updating your net worth statement so you can see what direction you’re moving in, and set some goals accordingly. It also means appreciating what you have instead of always looking at what you have not.
Look into the corners and crevices to get at the guck you’ve been ignoring. When was the last time you looked at your insurance coverage? Should you raise your deductibles to save some money? How about switching your home insurance for a better deal? What made sense a few years ago when you put those policies in place, may no longer be working for you today.
Are you happy? At its core, financial planning isn’t just about the money. It’s about what you’re doing with the money. If you’re not happy, you’re doing something wrong. Whether you want to spend more time with your children or wish you could travel more, look at your goals and revamp your plan to meet them.
We feel so good when our homes are bright and shiny, put a little elbow grease into your money and it’ll glisten too.