By Haley Tolitsky, CFP
The weather is warming up, the flowers are in bloom, and tax season is over—it’s officially spring! Many are tidying up their homes for spring, and it’s also a great time to clean up your finances in the spring. Taking stock of your financial situation now allows you to enjoy the summer with the peace of mind that you are on the right track to achieving your goals. Here are some important steps to take.
Adjust your budget for inflation and summer plans
The annual inflation rate jumped to 8.5% last month, which you’ve probably felt because of rising costs, such as groceries and gas. It’s likely that your budget from last year doesn’t match what you’re spending now. Review your spending categories for the last three months to see if any adjustments need to be made. If you don’t have a budget yet, start here and consider downloading a budgeting app, such as Mint, to help get you on the right track.
You most likely have more plans this summer than in the past two years as travel reopens and events resume. Remember to start saving for these plans now, so you can comfortably afford them when the date approaches. If you know how much you need for a future cost, like 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 save for that expense each month. .
Assess your cash 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 extra funds after paying your expenses each month, consider increasing your investments or paying off your debts.
If you find yourself in a constant, negative deficit each month, review your budget to determine which expenses you can reduce or eliminate. Housing, transportation, and food are usually the three biggest expenses we have, so if you’re able to narrow down any of these categories, it can make a huge difference. You can also consider ways to increase your income, such as negotiating a raise, changing companies, or starting a side business.
Find places to automate and cancel all unused subscriptions
Using technology to automate your finances makes you consistent and saves you time and stress. Setting up automatic transfers from your checking to your savings, having your bills automatically read, and systematically contributing to your investment accounts are just a few ways to get started. Also, check 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 unpaid debts. If your credit score is good and you pay off your balance in full every month, ask yourself if your credit card still offers the benefits you want most, like cash back or travel rewards. If not, it might be time to shop around for a new card.
If you don’t plan to apply for new credit or a loan (mortgage, credit card, auto loan, etc.) in the near future, it’s a good idea to freeze your credit. A credit freeze prevents new accounts from being opened in your name, protecting you from fraudulent activity. It’s free and does not affect your credit score. To freeze your credit, you will need to submit an online request to each of the three major credit bureaus: Equifax, Trans Union and Experian. Be sure to store the passwords and PINs you select, as you will need them to unlock your credit in the future.
Small steps today ensure you are on the right track for your future. Take the 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, North Carolina, offering highly personalized financial planning and investment management services. She is passionate about financial empowerment, especially 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 protected]
Securities offered through The Strategic Financial Alliance, Inc. (SFA), Member FINRA, SIPC. Advisory services offered by Allegiance Financial Group Advisory Services, LLC (AFGAS). SFA, AFGAS and Cooke Capital, Inc. are not affiliated. Supervisory office: 678-954-4000.