Do This One Thing to Set Yourself Up for Financial Success in 2017
When it comes to your finances, do you take a head-on or head-in-the-sand approach? If you identify with the latter, then the good news is, you're not alone. The bad news? You're not alone. New data suggests that when it comes to managing money, women are not as independent as you'd expect. In fact, 91% of women in couples are not participating in financial decisions. But we want to change that statistic. To help you become a master of your own finances, we're debuting a new series called The Paper Files, where we uncover tricks and tips that will help you manage your money and your future. Ready to take it head-on?
Spring heralds a clean-slate mentality, but when everyone else is busy decluttering their cupboards, color-coding their closet, and deep-cleaning their carpet, I take a different approach. Just a few months after the New Year, spring is the perfect time to take a fresh look at your finances, review how you're tracking toward your goals, and adjust your game plan.
If the thought of sifting through receipts sounds as scintillating as cleaning your gutters, we hear you—thankfully, there is a way to minimize your time and maximize the rewards. Each year, I set aside an afternoon to do a three-hour "deep clean" of my finances. Not only does it make me feel more in control of my money, but it also reduces tax time stress and gives me a new burst of much-needed motivation to keep tracking toward my goals.
Start the timer—Here's how to spring-clean your finances in three hours flat.
Use the first hour to collate all your financial information. This data will form the basis of the next two steps, so try to be as thorough as possible.
Collate receipts. Receipts and spending records will help you review your habits, plan next steps, and prep for tax time. "What you do in your day-to-day life can be worth valuable tax deductions," says tax expert Lisa Greene-Lewis of TurboTax. "Don't forget to gather your receipts for things like job search expenses, moving expenses if you moved for another job, unreimbursed employee expenses, child care, and your charitable donations, which may be tax deductible."
Check your credit score. "If you haven't checked your credit score recently, now is a great time," says Kimmie Greene, consumer spending expert at Mint. Credit Karma offers free credit score updates as well as reports and score insights. "If it's lower than you had hoped, commit to making all credit card payments on time, and focus your energy on chipping away large credit card balances and sources of debt," she recommends.
Gather paychecks. This is particularly important if you have multiple sources of income. Create a digital folder to house all of your income information, and gather paychecks and invoices so they're in one place.
Your To-Do List:
- Collate receipts and spending records
- Check your credit card score
- Gather paychecks
Next up: Use the second hour to review the data you've gathered. This will be key to inform step three.
Review your budget. It's been a few months since you set your 2017 budget—have you stuck to it? "Ask yourself: Is it realistic? Are you on track toward your savings goals? Should you allocate money differently," suggests Greene.
Scrutinize paychecks. If you don't regularly look at your paychecks, take 15 minutes to read through them. Make sure all of your deductions are correct, and if your pay varies, schedule a catch-up with your employer to understand why.
Go digital. If you find yourself checking jean pockets and squinting at crumpled, faded paper receipts it's time to go digital. Receiptmate allows you to scan hard-copy receipts into Evernote and extracts information, while Mint pulls insights from your bank account and tracks spending trends.
Compare credit cards: Take 10 minutes to browse the credit card market, and make sure you're still getting the best deal. Services like Nerd Wallet and Compare Cards allow you to review your card against other competitive offers.
Your To-Do List:
- Review your budget
- Scrutinize paychecks and regular deductions
- Download a finance-tracking app
- Compare credit card offers
You've collated all of your financial information into one place and reviewed key information. Now, it's time to pull key insights and alter your game plan.
Think ahead. "While you're reassessing your budget, consider the next six months and any big ticket items or events coming up—weddings, vacations, holiday shopping," Greene says. "If you need to up your savings goals to comfortably cover these bigger expenses, now is the time do so!"
Automate payments: Have you incurred late fees from forgetting to pay bills? Set up automatic transfers so that you always pay the minimum on your credit card balance.
Schedule time with a professional. Finish off your financial "deep clean" by making an appointment with a financial planner. By the end of this three-hour spring-cleaning session, you'll probably identify a few aspects that require closer attention—investing money, changing your 401(k) contribution, etc.—so set aside some one-on-one time, and resolve to tackle those goals head-on.
Your To-Do List:
- Build a buffer in your budget for upcoming expenses
- Set up automatic bill payments
- Schedule a meeting with a financial planner
Ready to give your home the same spring-cleaning treatment? Follow this step-by-step guide to clean your home in a weekend.