Spring clean your budget
Spring is here! Hurray! It’s time to throw open those windows, engage in a little spring clean and shake the winter doldrums out.
It’s also a great time to use the same approach for your budget, which you should revisit at least once a quarter. Here are some pointers on how to spring clean your budget.
The paper trail
Whether you receive your bills electronically or whether you use old-fashioned paper, the basics of budgeting involve knowing what you owe so that you can account for your spending.
If your accounting leaves something to be desired, now is the time to get organized. Find a system that works for you. Consider using a spreadsheet, collapsible file folder, envelopes or a binder with individual sleeves.
Clean your finances
When you clean your house, you usually do it one room at a time. The same approach should be used when cleaning up your finances. Start with one focus area- whether it be a specific debt, spending habits or lack of savings.
When it comes to your debts specifically, it is far more effective to tackle one debt aggressively than to “share the wealth” around. The faster you pay down a single debt, the less interest you’ll pay. That is why it is a good idea to start with your highest interest debt first.
If you’ve not set goals, now is the time to do so. Short and long term goals are the best way to measure the effectiveness of your strategy over time.
If you do have goals, it’s time for a hard look at what you’ve been doing. Are you on track? Are your goals/milestones appropriate? If not, now is the time to make some changes.
Why are you falling short of your goals? Go line by line through your budget. Is the problem with your spending? Are there areas in which you can improve? Maybe your goals are unrealistic? If your goals are unattainable, then you are always going to feel like you are falling short- and that’s not going to help anyone!