Today’s guest post is by Tia, who is passionate about helping millennials reach financial freedom through budgeting, saving, and investing. In addition, she enjoys teaching her favorite travel hacks and showing millennials that you can have fun while being financially responsible. Check out her site at www.financiallyfitandfab.
After weeks (or months, for some) of warm (hot!) weather, summer is definitely here! While the beginning of spring typically signals spring cleaning–you know, giving away old clothes, cleaning out the garage or basement, and giving the entire house a good deep scrub–one important task often forgotten during spring is to clean up your finances. In honor of summer, check out these 5 easy steps to declutter your finances!
Take Financial Inventory
The first step in removing clutter from your finances is to take inventory of your situation. How many checking and savings accounts do you have? How about credit cards? A good way to figure out how many credit accounts you have is to pull a free copy of your credit report. Next, do you have any 401Ks floating around from previous employers? What about IRAs? Once you asses the situation, you can move forward and make educated decisions.
Once you figure out how many accounts you have, take a look at past statements. Have you been charged interest or fees on any of the accounts? It is time to stop giving the banks your hard-earned cash! Forget the fees and keep more money in your pocket. If you have multiple retirement accounts floating around, have you considered processing a transfer of assets or rollover to consolidate them?
Now, I am not saying you need to go down to 1 bank account, 1 credit card, 1 retirement account etc… What I am asking is are all these accounts working in your best interest? If one credit card charges a very high interest rate, can you do a balance transfer to another card with low or no interest? If one checking account charges you a fee for low activity, can you increase the activity or close that account?
Examine Bank Statements For Incorrect Charges
While you are taking inventory of your financial accounts, play close attention to your bank statements. Besides looking at the fees and interest, take a hard look at all of the debits. Have you been charged multiple times for one transaction or service?
Unfortunately, I didn’t always “clean my finances” regularly. For three months my car insurance was being charged double and I had no idea! If I had checked my bank statement regularly for incorrect charges, I would have been alerted right away. Luckily, the insurance company was able to correct the charges. However, I want you to learn from my mistakes.
Review All Monthly Subscriptions
Netflix? Hulu? Gym memberships? Apple Music? Tanning memberships? Cable television? The list goes on. So many different charges are automatically set to come out of our bank accounts. When is the last time you actually watched Netflix? Or listened to Apple Music? It is time to take a hard look at all of the automatic debits that are leaving your bank account.
I know, I know, Hulu is only $8 a month, but have you really thought about how those small subscriptions add up over time? In addition, you may have signed up for certain services like cable television or internet during a promotion. What happens when the promotional period ends? Typically the price skyrockets. Have you called to negotiate any of those services?
Personally, I cancelled cable television, Apple Music and Netflix. Although those charges were only $84 per month from my budget, over a year I saved myself just over $1000! It is time to declutter your checking account and cancel some of your monthly subscriptions. If you aren’t ready to go cold turkey, at least ensure you have negotiated the best prices.
The last step to remove the clutter from your finances for the summer is to shred! This is my favorite part of the process! How many credit card offers do you have lying around? How about miscellaneous bills from the past 2 years? Take the time to go through all your documents that contain sensitive data and shred the ones that you no longer need. Experts recommend that financial documents that pertain to tax filing be kept for 7 years. Bank statements may be kept for a few years – but only if they’re not available online.
If you are afraid of completely getting rid of documents, then consider scanning them to your computer or an external hard drive. Not only will it free up space in your house, it will also provide peace of mind. In the event of a break-in or fire, your documents will still be safe.
When is the last time you decluttered your finances? Please share your tips below.
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