Spring cleaning
How to freshen up your financial situation
Spring is in the air, which for many means it’s time for a little spring cleaning.
After a difficult year for many financially, there’s one often overlooked item you’ll want to ensure is on your spring cleaning checklist: your finances.
According to a study from WSFS Bank of 2,005 Americans between ages 18-40, 43% of respondents frequently have trouble paying everyday living expenses, with 19% saying it happens to them “constantly.”
Struggles with their saving and spending habits have left many respondents feeling common monetary goals are out of reach, including saving for emergency funds (39%), saving for retirement (38%), buying a home (37%) and building good credit (36%).
Here are a few ways you can take control of your finances and build money management confidence.
Build a budget and stick to it
The first place to start to achieve your financial goals is building a solid budget. Sixtytwo percent of respondents said they’re not good at sticking to a budget, while 64% agreed they struggle with tracking expenses.
There are plenty of budgeting strategies out there, and no one method is the right fit for everyone, but the end goal should always remain the same: a balanced budget.
Start by calculating your monthly income and various expenses; creating a spreadsheet using Excel is a good way to keep track of various items. If your expenses outweigh your income you will need to address the deficit as soon as possible to avoid putting yourself in a hole that could be difficult to emerge from.
Many banks offer tools and resources to help with budgeting and more, and for tech savvy savers, there are also a variety of mobile apps to help build and track your budget.
Review financial statements regularly
Forty-seven percent of respondents said paying bills on time is something they’re not good at and 53% said they’re not good at reviewing bank statements. While you don’t need to check your accounts daily, you should be reviewing them at least a few times a month to ensure you aren’t missing any payments on items like high interest credit cards.
Our busy lives can make it easy to forget due dates. Consider setting reminders on your phone or calendar to ensure nothing slips through the cracks and to help create a habit of checking accounts and statements.
Online and mobile banking make monitoring in real-time even easier and reviewing your accounts regularly can allow you to find additional savings.
Many consumers saw their habits and expenses change over the past year, including exercising at home and no longer needing gym memberships or finding other subscription services they’re no longer using.
Checking your accounts can help you identify areas to save and redirect money elsewhere, like your retirement account.
Keep an eye toward the future
While it’s important to ensure you have the funds needed to live a comfortable life now, you also shouldn’t lose sight of the future.
Eighty-seven percent of respondents said they’re not good at putting money into savings, and 55% said they struggle to increase 401(k)/retirement contributions.
If you’ve been fortunate enough to save more money over the past year as a result of working remotely or decreasing expenses in other ways, put these savings into a rainy day fund or increase your 401(k) contributions (especially if your employer matches) to take advantage of compound interest.
Consider setting up autotransfers from your paychecks into a separate savings or money market account, as you’re less likely to miss the funds if you didn’t know they were there.
It’s never too late to enhance your money management skills. If you’re looking to learn more about how to save for a house or retirement, there are an abundance of resources online, including interactive tools like WSFS iQ that can help you build your financial confidence.
And remember, every small bit saved makes a difference, so don’t overlook what may seem like minor victories while freshening up your finances this spring.