I need this reminder because it’s that time of the year when everyone is talking spring cleaning, de-cluttering and new ways to freshen up the home.
There’s nothing more freeing than emptying out all the old baggage and clutter that have accumulated over the winter, yet while we have no problem unloading the old clothes and organizing the shelves, many of us don’t focus on something even more important –
Attacking our Finances with an all-out Spring Cleaning Agenda.
Can you grasp how implementing a few changes can add up to hundreds, if not thousands, of dollars over just a few months?
It does. It really adds up.
Make your list and check it twice because here are five of the most important financial items to focus on over this next season.
Put $1,000 into Your Emergency Fund
This is always my first piece of advice and I am PASSIONATE about it! The Wall Street Journal statistic cites 70% of all Americans live paycheck to paycheck.
Have you been there? Do you understand that kind of stress and how it affects not just your pocketbook, but your family, relationships and life?
Since we have gone through two periods of unemployment, I am a stickler for not “living life” unless we have an emergency fund in place. Meaning, we cease all spending in this household until we have a fully funded emergency fund. I’ve been through too many sleepless nights without a Plan B in place and we’ve learned that lesson well.
What’s an emergency fund?
As Dave Ramsey calls it, “An emergency fund is a rainy day fund, an umbrella. It is for those unexpected events in life: a job loss, an unexpected pregnancy, a car transmission going out, and so on. ” This is not putting money into an investment fund, although I recommend that too. This is not a “We really need a family vacation so let’s use this money fund.”
It is exactly what it says – an emergency fund! Do not touch unless it’s an emergency! Save $1,000 as a baby emergency fund. A fully funded emergency fund is 3–6 months of your personal expenses set aside in a savings or money market account.
Get Your Plan On Paper!
For a free spirit like me, this is painful, but critical!! In fact, I call it the Dreaded B word, but you must start somewhere! In Stephen Covey’s book, “The Seven Habits of Highly Effective People” he states that one of the habits of highly effective people is that they begin with the end in mind. I often quote my own dad who drilled into us “nothing becomes dynamic, until it becomes specific.”
Start with a budget, on purpose and on paper.
Your money MUST be spent on paper before you have it in your bank account. By doing this, you learn to take control of your money instead of the money controlling you. Then make plans for the money, short term and long term. My desire is to give more generously, but if finances control me, that priority gets lost. I don’t want that to happen.
Save on Last-Minute Taxes
Time is running out as you scramble to get those dreaded taxes done. Many of you will pull all-nighters this weekend just trying to juggle last minute details. Unfortunately, with the overwhelming amount of tax information to process, rushing will make you miss key deductions. (Ok, the tax deadlines have passed, but don’t let the same thing happen next year. Plan ahead, don’t get caught owing and make a change.
We want you to maximize your savings and pay less, so get help if needed. Recent tax changes make it nearly impossible to navigate these waters on your own. With the Affordable Care Act, medical deductions have changed, not to mention taxes for the self-employed, those with investments/capital losses, the self employed, adoption deductions, college students etc.
The list goes on and on. Am I ruining your week? All this talk on taxes?
Don’t fret! There’s nothing wrong with filing an extension and asking for help to navigate it.
I understand tax procrastination. It’s this time of the year when my husband (a financial guy) is bombarded with requests for help on taxes. The problem? These requests have come too late to navigate the best savings for them and tax professionals are booked already, so 99% of the time, my husband files an extension for them so they can sort through this major financial hurdle calmly without rushing.
If you are feeling stressed right now about your taxes, don’t put this off any longer.
Get Set Up Online
For many of us, late fees have taken their toll on the budget. It’s amazing how that $25 sucker punch here and there adds up. I know my weaknesses and one of them is actually getting things in an envelope, with a stamp, and then walking it to the mail box. Yes, it’s pitiful, but I have identified it and dealt with it. 🙂
One of the most freeing thing I did was to set up automatic monthly renewal notices and automatic payments. If this is an area of weakness, get these items on line. You will not regret it.
When you think of your calendar, don’t just include important dates and meeting deadlines, but set reminders for key financial deadlines and goals as well. Let all this technology help think for you, so you can focus on the important tasks at hand.
One of the benefits of getting things set up online is the beauty of slowly going paperless.
One of our speakers last year from my Becoming Conference developed an entire system called “Taming the Paper Tiger.” Her analogy is on point. It can definitely over take you if you let it,.
Our filing cabinets are filled to the brim with papers we no longer need. As we spring clean our clutter, I need to spring clean the financial papers as well and shred! There’s freedom in going paperless and beginning to scan documents is a great option. Find the system you are most confident in such as scanning items to your iCloud. There’s a debate about how long tax documents should be saved. Anywhere between 3-7 years is recommended, but those papers from college? Shred them!
Contribute to Retirement
Finally, if you have an emergency fund set in place, then quite possibly you have something to contribute to a retirement fund. The amount you put into this retirement fund will directly affect your taxable income by the dollar amount you contribute. With tax time right around the corner, this can lead to tremendous last minute savings.
My list continues, but those five ways are a great to start to spring cleaning those finances.
Are there other areas that you are focusing on right now to get yours in order?
I’d love to hear them.
(This is a repost from earlier because I always need the reminder.)
Simple, practical tips to help you save thousands. 5 Ways to Spring Clean Your Family Finances and put more cash in the bank now!
These are so practical! Fully funded emergency fun is our goal.
I haven’t looked into the Local Providers but love Dave Ramsey. I’ll have to go check them out.
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We are working hard on getting out of debt and always thankful for the reminders.
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I have the hardest time getting a fully funded emergency fund! It seems like every time we are almost there, something comes up and we are back to square one. My husband recently switched jobs, which left us in a bind for a few weeks, but we survived and for the first time in months I feel like we’re going to be okay, that we’re going to be able to get out of this mess. I never knew how stressful it was on me with him getting paid weekly previously and how stressful it was to juggle the bills with a weekly pay {one would think getting paid weekly would be great}. Now that he’s getting paid biweekly and both our pay periods are the same week, it was such a relief to be able to sit down this week and pay half the months bills {on time, I’d been juggling things due to not having enough money until later in the month} and know that everything else will be paid with our next pay. And I feel like I’ll actually be able to use the envelope system now.
Thanks for these reminders. :o)
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Jen Reply:
April 13th, 2014 at 10:29 am
Oh Amber – I feel your pain and we were right there with you years ago. Sometimes, it feels as if we’re getting kicked when we’re down, doesn’t it? Yet, I love hearing your resolve to keep going and not giving up. It’s the first time in years that we’ve been on the other side and I can honestly say that sticking with it, is SO worth it!! You can do it!! I know you can. 🙂
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I’m a Dave Ramsey junkie and we are DEBT FREE except for the house! We are currently building our 3-6 month emergency fund. I’m passionate about finances too! It is so freeing to have financial peace!
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Over the course of time, our tax code has gotten more and more complex. You give good advice to get help, especially from Dave Ramsey’s network of ELP’s. I personally know the CPA in our area and he is fantastic! You can file an extension and then set an appointment to get some great advice and filing help. It is almost a guarantee that you are missing some new tax law change, so getting help would definitely be recommended.
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Jen Reply:
April 13th, 2014 at 10:25 am
Thanks so much for your input and experience.
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Great tips, thanks for sharing!
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I started a budget when I had nothing but a savings account at the time. I thought it was silly at first. I now have a debit account for food, a date night fund, an account specifically for bills, an emergency fund, and a savings that pulls every time I use my debit card for tiny emergencies or vacation. Moving everything to it’s fund every month then using what’s left for what’s needed is such an ease on my mind. If there isn’t any left, no more food, I HAVE to pay my bills, and just put it in there once a month. I know exactly what I can spend on myself, then put what’s left at the end of the month toward my credit card debt (almost gone!!!).
Having an emergency account has gotten me out of huge binds, such as totaling my car when I was young and having a much smaller loan payment (use what you would have paid extra to refill the emergency fund)
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Jen Reply:
November 23rd, 2014 at 7:20 pm
Kay – I love hearing your story. It does seem silly at first, but what a difference it makes in the long run. Thanks for sharing.
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I loved the automatic payments, I have done those for several years from our bill account. Recommend the book – Automatic Millionaire. Thanks Jen!!
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Jen Reply:
March 9th, 2018 at 10:08 am
Oh thanks for the recommend – off to check it out.
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