By Guest Blogger Lauren Davidson
For most people, the tradition of spring cleaning – a literal top to bottom reaming of their house – seems to be fading as modern conveniences has made it easier to keep on top of housework during the cold winter months. However, many people still use it as an opportunity to organize things, such as their garage, their pantry, their junk drawer or their closets. Coming as it does in the midst of tax season, more Americans are using the opportunity to spring clean their finances, particularly in organizing the family budget. You may have made a New Year’s resolutions to save more money or pay off debt, but these spring cleaning tips for your family budget will actually enable you to keep them.
Thoroughly Analyze Your Spending Habits
If you have a budget, whether formal or informal, spend an afternoon thoroughly analyzing your spending habits. Go back through six months of spending using your check book, credit card statements. Hopefully all of your finances are online. With some online accounts the system can break down your expenses by category. Add up expenses by category and calculate what you are spending monthly for each. Make notes where you think you can cut back spending and make a list of your splurge or impulse buys over that period. Figure out how much you should actually be spending as a first step in creating your budget.
There are many great mobile apps for tracking and managing your spending. Many will even link with your accounts so your information can be downloaded and organized on their platforms. With a few clicks you can set up spending categories and these apps will automatically load your information where it is supposed to go.
Make Your Budget Excuse-Proof
Most families try their best to live by a budget, but often fall victim to life, which creates the “things happen and we’ll get on track with our budget next month” attitude that dooms so many good intentions. This time make your budget excuse-proof by giving it a complete makeover with built in accountability measures.
The key is to set realistic and manageable goals. If you have debt, your goal should be to pay it off as quickly as possible. If you need to save more, your goal should be to increase your monthly savings amount. When you plug your savings or spending goal into an app, it will help you figure out how to achieve it based on your current spending pattern. If, you fall short, many of these apps will help you find ways to reduce spending in non-essential categories.
By linking your budget to a specific goal with the ability to track your actual spending, you run out of excuses for not sticking to your budget fairly quickly. It is up to you, however, to stay focused on your goal, making it a priority over anything else on which you may want to spend your money.
Create a Debt Pay-Off Plan (or, Have a Plan to Stay Out of Debt)
If you are debt-free, congratulations! That should make it much easier to accomplish your spending and savings goals. If you are still in debt, the spring cleaning of your budget is an opportunity to zero in on it with a plan to nuke it out of existence, especially if it is a hindrance to achieving your goals. Your debt payment plan starts with a thorough analysis of your spending and it should be a priority goal for your budget. Paying down high interest debt can have a much bigger impact on your finances than saving money for a 2% or even 7% return. Some student debt can have interest rates topping 12% and credit card debt can have rates as high as 30%!
Personal finance apps have tools to help you create a debt payment plan and track your progress. Another program, ReadyforZero, is an award winning program design specifically to help you create and track a debt payment plan. The program can link to all of your credit accounts and allows you to set up automatic debt payments. Use this program if you are serious about following a debt payment plan.