3 Steps To Spring Clean Your Finances

Whether your spring cleaning philosophy is “get behind the fridge” or “oops, maybe next year,” giving some special spring cleaning attention to your finances is essential. Money is a leading cause of stress but people who shy away from organizing their finances wind up with even larger money problems are less in control and feel more overwhelmed than ever. Ignorance is NOT bliss when it comes to your money.

Make the time to take charge and minimize, or even eliminate, money stress this spring with Sybil’s 3-step plan to spring clean your finances.

Step 1: Take control of your cashflow.

Gather your bank and credit card statements and make a list of your income and expenses. Don’t forget the periodic expenses that often take you for surprise such as annual car insurance or emergency repairs on your home or vehicle. To make things easier, record your income and expenses in our free, downloadable Cashflow Snapshot template!

Next, identify any deficits. Do not spend more money than you have! If your expenses are higher than your income, you have 3 ways to solve that problem:

1. earn more money
2. spend less by eliminating non-essential expenses or
3. a combination of the two.

This exercise should be done at least once every 3 months, ideally every month until it becomes second nature and your finances no longer scare you. Don’t under-estimate how powerful this seemingly simple exercise is. The majority of financial stress usually stems from not feeling like you have enough money to cover your expenses. Listing your income and expenses will help you uncover any shortfalls and help you begin to take control of your cashflow.

For more on taking control of your finances, read Sybil’s 5 step plan to reduce anxiety and frustration around your finances.

Step 2: Get organized.

Now that you have a handle on your regular expenses, there are a number of things you can do to get your finances organized. Here are Sybil’s top recommendations:

• Set up pre-authorized payments for the regular monthly bills to avoid facing a late payment and corresponding penalties and interest. Talk to your bank about getting overdraft protection to ensure you don’t face any nasty “non-sufficient funds” penalties and fees.
• Identify expenses that are periodic or annual and calculate how much per month you need to save in order to pay those expenses when they come due. Set up an automatic money transfer to a savings account for this amount each month so when your bill comes due, the money is there to pay for it painlessly. For example, if your car insurance is due every January and costs $1200, start a $100 monthly transfer into your savings.
• Get a checklist from your accountant of all the slips you need to submit each year and then start a filing system to have those receipts ready. If you run a business or own a rental property, consider subscribing to Quickbooks so you can input your receipts each month (including saving a copy of the receipt in the program to eliminate paper) so come tax time you simply print your profit and loss statement for the accountant to process.
• Set up a savings account to start building an emergency fund for unexpected expenses. Once you have an emergency fund, you can start building a retirement savings plan and a fun account to do the things you really want to do such as going on a trip, upgrading your vehicle, or buying a new TV.

Step 3: Reward yourself.

You’ve done good! Getting your finances organized can seem daunting but you’ll reap the benefits going forward. Reward your good behaviour with a treat occasionally, but ensure you achieve the basics above first. Spending more money than you have for something you want right away often leads to buyer’s remorse and feelings of guilt and disappointment. To avoid this, don’t treat yourself until you have the money to do so. If you pick something you really want, that desire will fuel your motivation to stay on track to achieve your financial goals and dreams.

Have a question or need more advice? Contact Us to send Sybil an email to learn more!