Spring is right around the corner—even if the current weather doesn’t seem to agree! Though you may still be hunkering down to endure the winter, you need to make sure your thoughts are on prepping for the season to come. One of the most important areas of your life to do this is your finances. Here is how you can prep your finances for spring so you can enjoy the warmer months ahead.
Spring Clean Your Credit
Your credit score plays an important role in your financial health. It can affect everything from loan interest rates to job opportunities and more. Though you should be checking your credit regularly, spring is a great time to do a thorough investigation.
Here are some steps you can take to ensure your credit is as healthy as possible:
- Read your free credit report. Access one (or all) of the three major credit bureaus (Equifax, TransUnion, and Experian) to get a free report on your credit. You can see your score as well as check it over for any inaccuracies.
- Fix errors. If you find anything amiss, you can dispute the mistakes with the credit bureau as it may be having a major impact on your score.
- Check your utilization. How much of your available credit you’re using is an important factor in your credit. If your ratio is not good, consider paying down balances or requesting credit increases.
Review Your Spending Habits and Budget
Spring is an excellent time to look at your budget. Whether you’ve been sticking to your budget all winter or have let things slide, it’s time to assess where your money is going.
Consider doing the following:
- Track your expenses. Go through the last three months of your bank and credit card statements to identify patterns. Are there any areas where you’ve been overspending, such as dining out or impulse purchases?
- Adjust your categories. If your income or expenses have changed, update your budget accordingly. If you’ve been paying off debt, reallocate funds toward savings or additional debt payments.
- Cut unnecessary spending. Spring cleaning your budget includes trimming down on non-essential expenses. Could you cancel unused subscriptions or memberships? Are there cheaper alternatives for your regular expenses?
Set New Savings Goals
Winter months tend to be slow financially for many people and present fewer opportunities for extra income or saving. Spring, however, is the time to revive your savings goals. Whether you’re saving for a vacation, a home, or an emergency fund, now’s the time to reassess your progress and make adjustments.
Here are some ideas to help you out:
- Set new goals. What are your goals for the next few months? Start by setting realistic short-term and long-term goals based on your current financial situation.
- Automate savings. Spring is an excellent opportunity to automate your savings, so you’re consistently putting money away without thinking about it. Consider setting up automatic transfers to a high-interest savings account or investment account each payday.
- Boost your savings rate. If you received a tax refund or bonus during the winter, use that windfall to boost your savings, rather than splurging on luxuries or treating yourself.
Tackle Debt Repayment
Many people find themselves in debt during the colder months due to the holiday season, unexpected emergencies, or slower business. Spring is an ideal time to start getting serious about paying down those balances to improve credit and take off stress.
Here are some ways to help you deal with debt:
- Prioritize high-interest debt/ Focus on paying off high-interest debt first, such as credit card debt, to reduce the amount you’re paying in interest over time.
- Consider debt consolidation/ If you’re managing multiple debts with varying interest rates, consolidating them into one loan with a lower interest rate can make repayment more manageable.
- Set milestones: Set a realistic repayment plan and timeline. Celebrate small wins along the way, such as paying off a credit card or a loan.
Get Your Taxes in Order
If you haven’t already, now is the time to get your taxes in order. Spring often marks the deadline for filing taxes and it’s a smart move to review your financial documents early to avoid last-minute stress.
Here are some ways to start the job of filing taxes:
- Gather documents. Make sure you have all the necessary documents, such as W-2 forms, receipts, and any deductions you might qualify for.
- Seek professional help. If your financial situation is complicated, consider hiring a tax professional to ensure you’re maximizing your return or minimizing your liability.
- Plan for a refund. If you’re expecting a refund, have a plan for how to use it wisely. Consider using it to pay down debt, fund your emergency savings, or invest in long-term goals.
Preparing for spring is the best way to use the last few weeks of winter to their full advantage. If you have questions about your finances or taxes and would like to talk with a professional, the experienced team at Hayes & Associates would love to help.
