While you’re busy preparing for the warm summer months, why not cleanyour finances this SPRING as well? Spring is the perfect time to prepare your finances
for the upcoming year! Here are some common areas to spend some time on:
Dust off your emergency fund.
You knew this one was first, right? An emergency fund is our buffer against disadvantaged borrowing, like from credit cards or investment accounts. It’s the first thing we check when we evaluate a new client’s finances. That’s because it’s the first step in building a sustainable household cash management plan. We recommend at least three months of your expenses in one account you can easily access if the need arises.
Sweep up any remaining debt.
Let’s make sure you’ve got any credit cobwebs swept up. Request your annual credit report to see your credit score and check for any outstanding accounts with balances (or accounts you don’t recognize). Use excess cash plus your emergency fund to pay off any remaining balances if the total is approximately equal to one month’s expenses. If your balances are more than three times your monthly expenses, try this strategy:
First, write down the lender, the total amount borrowed, and each loan’s interest rate. Prioritize unsecured loans (like credit cards) over secured loans (like a mortgage or car payment) because the interest rates tend to be higher. Then, start paying off the accounts with the highest interest rates first. If you need a second opinion or need help putting together the plan, please contact our office. We’d love to help!
Remodel your budget.
The holidays can throw even the best budgeters off their game! Spring is the perfect time to take a crack at your budget. The budget ultimately needs to give you three numbers: how much is coming in, how much is going out, and what’s left over. There are lots of ways to arrive at those numbers. What’s important is that you have them and that you keep them updated. That way, our team can help structure a household cash flow strategy, which is the first step in a sustainable retirement plan.
Give these three steps a shot this spring! It’s the perfect time to get your household’s finances in pristine condition. Maybe we can even find some
extra cash for a summer vacation? As always, please contact the office for a second opinion or for help putting these ideas to work.