By Haley Tolitsky, CFP
The weather is warming up, flowers are in bloom and tax season is over — it’s officially spring! Many are tidying up their homes for the spring season, and it is also the perfect time to spring clean your finances. Checking in on your financial situation now allows you to enjoy the summer with peace of mind that you are on track to achieve your goals. Here are some important steps to take.
Adjust Your Budget for Inflation and Summer Plans
The annual inflation rate surged to 8.5% last month, which you surely have felt through rising costs, such as groceries and gas. It is likely that your budget from last year does not match what you are actually spending now. Review your spending categories from the last three months to see if adjustments need to be made. If you don’t already have a budget, start here, and consider downloading a budgeting app, such as Mint, to help you get on track.
You most likely have more plans this summer than in the last two years as travel reopens and events resume. Don’t forget to start saving now for those plans, so you can comfortably afford them when the date approaches. If you know how much you need for a future cost, such as a vacation, take that dollar amount and divide it by the number of months until you need to pay to find out how much you should be saving for that expenditure each month.
Assess Your Cash Flow Surplus or Deficit
The key to a successful financial plan is understanding your cash flow and putting your extra dollars to work. If you have additional funds after paying expenses each month, consider increasing investments or paying down debt.
If you find yourself in a consistent, negative deficit each month, review your budget to determine expenses you can reduce or eliminate. Housing, transportation and food are typically the three largest expenses we have, so if you are able to cut down one of those categories, it can make a huge difference. You may also consider ways to increase your income, such as negotiating a raise at work, changing companies or starting a side-hustle.
Find Places to Automate and Cancel Any Unused Subscriptions
Using technology to automate your finances makes you consistent and saves time and stress. Setting up automatic transfers from your checking to your savings, auto-playing your bills and systematically contributing to your investment accounts are just a few ways to get started. Also, review your transaction history to see if there are any unnecessary subscriptions that can be canceled, including shopping platforms, streaming services and membership fees.
Check Your Credit Score and Consider Freezing Your Credit
You can check your credit score for free at AnnualCreditReport.com. After reviewing your score and checking for fraudulent activity, see where you can make improvements, such as paying off your credit card balance and outstanding debts. If your credit score is good and you pay your balance off in full each month, ask yourself if your credit card is still providing the benefits you most desire, such as cashback or travel rewards. If not, it may be time to shop around for a new card.
If you do not plan on applying for new credit or a loan (mortgage, credit card, auto loan, etc.) in the near future, it is a good idea to freeze your credit. A credit freeze prevents new accounts from being opened in your name, helping protect you from fraudulent activity. It is free and does not affect your credit score. To freeze your credit, you will need to submit a request online at each of the three major credit bureaus: Equifax, TransUnion and Experian. Be sure to store the passwords and PIN numbers you select, as you will need them to unfreeze your credit in the future.
Small steps today ensure you are on track for your tomorrow. Take time to invest in yourself and your future. Happy spring!
About the author: Haley Tolitstky, CFP®
Haley Tolitsky, CFP®, is a CERTIFIED FINANCIAL PLANNER™ with Cooke Capital in Wilmington, NC, providing highly personalized financial planning and investment management services. She is passionate about financial empowerment, specifically for women and the next generation, and loves the opportunity to motivate and guide others to take charge of their financial lives. Haley can be reached at email@example.com.
Securities offered through The Strategic Financial Alliance, Inc. (SFA), Member FINRA, SIPC. Advisory services offered through Allegiance Financial Group Advisory Services, LLC (AFGAS). SFA, AFGAS, and Cooke Capital, Inc. are not affiliated. Supervising office: 678-954-4000.