The sun is getting warmer, the days are getting longer and we’re sneezing more from our snow mold allergies. It must be spring. This time of year is about taking a deep breath, refreshing yourself and coming out of winter hibernation (we should be proud of ourselves for surviving the 2019 polar vortex). It’s also the time to get tidying. Spring cleaning, however, isn’t only for your home.
From streamlining those savings goals to finding ways to cut down on your monthly spending, we compiled four ways to spring clean your finances.
Clean up your debt
The average Canadian has two or more credit cards. This is in addition to car payments, mortgages, lines of credit and private student debt that many Canadians hold. This is a lot of money owed to different places at various interest rates, making monthly budgeting difficult.
However, there is a way to simplify your debt. Many financial institutions offer debt consolidation. Through debt consolidation, financial institutions essentially give you a fixed term loan that pays off all your various debts and has the balance owing at a single source (and often at a much lower interest rate).
If you qualify, this is a solution that allows you to better control your debt and reduce your monthly payments while still gaining traction on your principal. The one catch is that working with some groups who offer debt consolidation can affect your credit score. Make sure the financial institution you’re dealing with doesn’t affect your credit when consolidating debt.
Typically, larger established banks are able to offer debt consolidation without affecting your credit score but they have much stricter requirements to follow. Private creditors can also offer debt consolidation services usually with much fewer requirements, but these groups will often affect your credit score.
Clean up your monthly spending
How often do you check your monthly bank statements? Checking your monthly statements could show what you’re paying for that doesn’t provide any value. We’ve all signed up for those monthly subscriptions that we completely forgot about. From online music and movies to gym and private club memberships, a lot of us pay quite a bit of money each month for services we don’t even use.
Spotting those extra charges and fees and working to minimize or completely cut out those expenses can help keep your monthly budget in check and open up tons of room for savings. If you haven’t used these subscriptions in the past month of two, maybe it’s time to end the subscription and find a no-cost alternative that works better. This could even extend to banking fees. All of Motive’s accounts have no monthly fees.
A way to help with non-essential spending each month is to give yourself a cash allowance. How this works is after you pay all your monthly bills like rent, phone bill and student loans, you pull out a set amount of cash for nights out and shopping. If you can stick to this budget each month for fun spending, you can start to see the positive benefits of a cleaner bank statement.
Let’s have a challenge. Go through your monthly account activity and see if you can cut it in half. Even see if you can fit your entire monthly account activity onto less than a single sheet of paper. Minimizing your monthly expenses could help you in not just cleaning up your finances but keeping a lot more money in your account.
Clean up your savings plan
We should all be saving more, but it can be hard to maintain that motivation. Some savings accounts come with hefty fees that chomp away at your money and some don’t even have savings rewards.
Having a savings goal is one of the first steps to take in cleaning up your savings. Knowing why you’re saving and setting an end goal will help keep up your savings momentum and ensure your money is going towards things you value, whether it’s saving for your first home, your next trip or your future retirement.
Finding the right savings account to fit your needs also helps your motivation. Motive’s Savvy Savings Account and Tax-Free Savings Account offer high interest rewards and no monthly fees. This is one way you can keep your savings plan on track and your monthly expenses down.
Clean up your home
Seriously, this can actually help. There are a lot of reasons why a tidier home can help with personal finances and all of them stem from a realization that maybe we spend too much on things we don’t need.
Being tidy often means downsizing. From clothes to collectables, downsizing might actually seem counterintuitive when it comes to finding financial balance. There are three things that need to happen after you downsize.
The first is to realize that all the things you let go of you never actually needed. The second is to hold on to that feeling of a clean and decluttered home to help motivate you to stay away from bad spending and collecting habits. The third is to not buy and replace any of the items you’ve downsized. Purging a closet shouldn’t be an excuse to go shopping.
To ensure that anything you downsize won’t cause financial strain later on, there are a couple of rules from the Minimalists you can try out for yourself. The first is the 20-20 rule, which asks if you can replace the item in less than 20 minutes for less than $20. Another is the 90-90 rule, which asks if you have used something in the last 90 days and if you will use it in the next 90 days.
Any home tidying and downsizing should be about appreciating the things you have. Marie Kondo, author of the book The Life Changing Magic of Tidying Up and star of the Netflix hit Tidying Up with Marie Kondo, often talks about sparking joy. When something sparks joy, you appreciate it on a much deeper level. It’s that appreciation that ultimately prevents us from buying any more than we need to and recognizing how much we have.
How are you spring cleaning your banking? Is there anything you’re thinking about minimizing? Like us on Facebook and Follow us on Twitter to let us know how you’re breathing some fresh air into your finances.