April is the month for spring cleaning, a time to get rid of the old so you have room for the new. April is also Financial Literacy Mmonth. So let’s give your finances a spring cleaning! Following is a suggested “SPRING DOZEN”: Tips you can implement to make sure the rest of your year proceeds with a “clean house” with room for growth, new ideas and the ability to set and implement action goals.
TIP 1: Go from a “scarcity” to an “abundance” mindset. Let’s get rid of those “cobwebs” in your head that clutter up your mind and inhibit progress. Ask yourself:
- What is my relationship with money?
- Is my relationship with money positive or negative?
- Do I believe those with money are evil and look down on others?
- Do I believe to have less money is better as it is more humbling?
- Do I subconsciously believe I do not deserve to be wealthy and have financial freedom?
- Where did I learn about money?
Did you frequently hear: Money doesn’t grow on trees. Pinch your pennies. It’s too expensive. We just can’t afford it.
These ideas leave you with a residual of webs in your head that inhibit progress. If these are the thoughts you have, then you have a bad relationship with money and a scarcity mindset that include:
- Financial worries that keep you up at night.
- Feeling like you will never get ahead.
- Worries about outliving money.
You’re never going to take the action necessary to acquire the wealth you need or take the steps to get your finances in order until you change your mindset. How do you change your mindset? Come out of your comfort zone. The old you can’t make changes. Take action!! Start by saying affirmations daily such as:
- I deserve financial peace of mind.
- I deserve financial freedom.
- Money, health, and wealth consistently flow to me from infinite and unexpected resources.
- I prosper in mind, body, and spirit.
- I give thanks for each new day, as each new day as a gift.
- I have an attitude of gratitude.
If you say these or other affirmations daily, you will train your mind to be more positive, you will change your relationship with money and move from a scarcity mindset to a mindset of abundance. What you thought was impossible will start to become the possible for you.
TIP 2: Set financial goals for the short term, midterm, and long-term. Decide if you want to pass on a legacy to your family.
TIP 3: List action steps to implement those goals such as:
(1) Establish your current financial situation by knowing your income, expenses, savings and plans to leave a legacy. Gather your paystub’s, your bank statements, insurance paperwork, retirement and investment account statements, loan and credit card statements.
(2) From these write down your monthly take home pay, list your expenses including groceries, eating out, auto, pet care, mani/pedi, hair, streaming channels, utilities, phone, clothes, auto, rent or mortgage payments and each credit card balance and payment. List the kind and amount of insurance you have and what amounts you have growing for retirement. Pay attention to the amount you spent in overdraft fees and late charges.
(3) From the above list, put a red check mark by the unnecessary expenses such as streaming services, excessive eating out, late and overdraft fees, and credit cards. Then decide which you can consolidate or eliminate.
TIP 4: Create a budget clarifying income, expenses, savings and discretionary month-end amount that works for you.
TIP 5: Keep all your receipts or take screen shots of online receipts to track your spending. At the end of the day look at those receipts and list your expenditures. Look to see if they match your budget.
TIP 6: Start an emergency fund so you do not have to use credit cards in an emergency. Do this by adding up all expenses for the month and multiply that by 3. The answer is the total you should have in an emergency fund. Open an account that will pay you good interest and decide on an amount to start setting aside each month to build up that fund.
TIP 7: Reduce your debt. Use “the snowball method” to pay off debts such as your car, loans and credit cards. Start by getting a stack of index cards. List all of your debts except for your mortgage. Get a stack of index cards. Write the name of the company or credit card, the minimum monthly payment and balance of each debt … one on each card. Arrange those cards from lowest to highest debt – regardless of interest rate. Increase the payment on the smallest debt and write it on the card. Pay minimum payments on everything else. Once that balance on the smallest card goes to zero, take that card out of the pile and add that payment to the second-smallest debt. You will continue making minimum payments on the rest. Soon you will have one card left in the pile. This debt “snowball method” eliminate your debts one by one.
TIP 8: Retirement savings. Decide when you can realistically retire. Determine how much you will need coming in per month in retirement and what that lump sum will be to carry you through retirement. Look at what you’re saving now for retirement and see if you will have that lump sum in place. If not, start making plans to fill in the gaps.
TIP 9: Examine what insurance you have to cover your income and protect your family should the unfortunate happen.
TIP 10: Explore options to supply income if you have a health issue and cannot work for longer than 90 days.
TIP 11: Decide if you want to leave a legacy for your loved ones or your favorite charity and how you will achieve that.
TIP 12: Last but not least, make sure you have a will and a trust to protect your property and avoid probate, a health care directive, a power of attorney in place and a beneficiary listed on ALL your bank accounts.
H A P P Y S P R I N G C L E A N I N G !!!