As we turn the corner on a crisp Chicago spring and bask in the sunlight, it might be time to take on a little spring cleaning. Historically, cultures all over the world have practiced some form of spring cleaning, and spring is always a time for new beginnings. Spring brings with it the first chances to open windows long-closed by winter’s cold and breathe fresh life into spaces heavy with winter’s dark. And spring cleaning isn’t just for dusty corners –shine the light of spring on your finances and make a fresh start with the following tips for financial spring cleaning!
1. Revisit your budget, or make a new one:
Knowing how much money you have and where your money is going is crucial to keeping your finances fresh. And yet, only 40% of adults in the United States say that they “have a budget and keep close track of their spending,” according to a 2015 consumer financial literacy survey. Take this opportunity to create a budget, and find a system for sticking to it that works for you. If you’re all about going digital, consider downloading a budgeting app like Mint, which allows you to set spending limits and link your bank accounts, and emails you weekly updates on your spending. If you prefer to keep track by hand, try setting up a notebook or spreadsheet where you log all of your spending. No matter what system works for you, the important thing is to keep track!
Budgeting exercise: Look through the last 3 months of your bank statements to identify patterns. Highlight necessary costs (bills, rent, groceries), important purchases (internet, cleaning supplies), and impulse buys in three different colors to see if your spending matches your priorities. This exercise will you help you see if you’re spending money on things you don’t really want or need, and as you create your budget you can use that awareness to guide you.
2. Contribute to your savings:
13% of adults in the U.S. worry most about having emergency savings, and a 2014 survey found that 58% don’t have emergency savings at all. In case of emergencies, financial experts recommend having 3-6 months’ worth of your income in savings, but any amount can help you feel more secure. Saving for retirement is also very important. Find out if your employer offers a retirement plan, and especially if they offer matching contributions! If they do, and you’re not signed up, it’s like leaving a raise on the table. However you save, build regular savings contributions into your budget, and consider it a necessary expense.
Savings strategy: If you have direct deposit and online banking, setting up an automatic transfer to your savings that coincides with your paycheck can be a great way to automate your saving and ease this worry. Most banks allow you to schedule transfers in advance, and even time them to coincide with your pay schedule. You’ll be pleasantly surprised to see how quickly your savings account will grow!
3. Tackle debt head on:
How much do you really owe? Take stock of your actual debt load and make a plan for paying it down. Debts can seem really intimidating, but seeing the full picture can empower you to make the plans that work best for you. Start paying toward the debts that have the highest interest, or, to really feel the thrill of accomplishment, consider paying off smaller debts in full when you can. Some studies have found that paying off small debts can motivate you to approach larger debts, and ultimately lead to more success overall. Like with your savings, make sure to factor these payments into your budget!
4. Check your credit report:
Credit is a growing essential to good financial health, but can be very hard to keep track of. Every year, you can request one free copy of your credit report from all three credit reporting bureaus at annualcreditreport.com or by calling 1-877-322-8228. This report outlines all the credit accounts and lines of credit you have, and other factors impacting your credit score. For help reading this report, and to get help repairing or establishing strong credit, visit a financial literacy specialist at Spanish Coalition for Housing –they can help you understand your credit report, and make a plan for fixing any errors that could be hurting you financially.
5. Enjoy free events all across Chicago:
Warm weather means getting out, but it doesn’t have to mean abandoning your budget. Chicago has so many free events to offer, and there’s something for everyone! The Lincoln Park Zoo and Garfield Park Conservatory are always free, and offer beautiful spaces to enjoy the natural world in the concrete jungle. The Art Institute of Chicago is free on Thursday nights for Illinois residents, and check out free days for other museums here. And all summer, you can hardly go anywhere without stumbling onto a neighborhood festival –check out a schedule for all of Chicago’s festivals here. Not to mention Movies in the Parks, farmer’s markets, Millennium Park workouts, and more!
No matter how spring inspires you to reinvigorate your finances, remember that you never have to do this work alone. Spanish Coalition for Housing has experienced Financial Literacy specialists who can help you make the best plan for you, and to support you every step of the way. Call to make an appointment with a financial literacy expert at one of our three offices today!