Give your finances a spring clean

As the temperature starts to warm up, it’s a popular time to dust off the cobwebs and give the house a thorough spring clean. But what about your finances? Revisiting your financial goals, making changes to ensure you are on the right track, and checking in on your household budget is a great exercise to do on a regular basis.

Here are our top four financial spring-cleaning tips to get on top of your finances:

1. Set realistic financial goals – and write them down

Research from the Dominican University of California* suggests that people who write down their goals are 42% more likely to achieve them than those that don’t. The research also shows that sharing your goals with another person may increase your chances of success further still. 

What are you waiting for? Grab a pen and paper and get started!

If you find goal-setting difficult, try breaking it down into smaller chunks:

• The big picture. Start with a long-term vision – think as big as you like. Picture your ideal lifestyle, your home and what you would ideally spend your time doing.

• Small wins. What are some of the smaller scale goals – for example, paying off a debt or boosting your savings – that you would like to achieve over the next month or year?

Keep this on hand and revisit regularly so you can track and keep on top of your goals. Make sure you tick off your small wins as you go – it’s always good motivation seeing what you’ve achieved.

2. Review your expenditure

Going over your expenses with a fine-toothed comb is a very important exercise to know exactly where your hard-earned dollars are going. Look out for unnecessary subscriptions that no longer serve your needs and identify areas where you could you cut down and save.

Of course, life is also about enjoyment. While living within your means is important, so is doing the things you enjoy – such as going out for a nice meal. Marie Kondo’s now famous advice on decluttering is to assess whether or not something ‘sparks joy’ for you or whether you should let it go. Cull the unnecessary expenses!

3. Create a budget

Budgeting is not a one-size-fits-all exercise and the best type of budget is one you use and stick to. If detailed spreadsheets aren’t for you, try:

• The ‘bucket’ approach – check out our article on the popular style of budgeting to find out more.
• A free online budget planning tool, like this one from us.
• A budget in the palm of your hand via a smartphone app, such as TrackMySpend or MoneyBrilliant.
• Good old pen and paper!

4. Prepare for the unexpected

If 2020 has taught us anything, it is that the unexpected can happen at any time. It is crucial to ensure that you have a ‘safety net’ in place in case of any unforeseen events, such as sudden job loss or illness.

This is a good topic to discuss in greater detail with a financial planner, but here are two simple ways to get started:

• Set aside some ‘rainy day’ savings - easily accessible funds you can draw on in an emergency.
• Check your insurance policies. It may be helpful to seek expert advice to ensure you have the right insurance for your circumstances and that you are adequately covered for life’s unexpected events.

Visit P&N Bank’s website to find out more about our insurance services. 

The start of spring is a great excuse to clean up your finances and get some good habits in place but, like all good habits, the key is consistency. Make a promise to yourself to regularly review your goals, budget and spending and you will find yourself on the right track to a better financial future.

*https://scholar.dominican.edu/cgi/viewcontent.cgi?article=1265&context=news-releases