Spring is a time to clean and renew. We open windows to let in sunlight, clean the house and get the yard in shape. This is also a great time to review and tidy up your finances. Here are some ways to spruce up your personal portfolio and work out a budget this spring:
Gather your most recent statements. Get all of your paperwork in order – gather all of your bank statements, investment account statements, utility bills, cell phone bills etc.. Be sure to include any miscellaneous expenses, such as parking tickets. This will give you the total number of your debt.
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Record all sources of income. Whether you are self-employed or work for a corporation and earn a regular paycheck, take the number after taxes and then list of all the ways that you earn your income. Do not include any returns of investments or income that is influenced by your current allocation.
List all of your monthly expenses. Write down all the expected expenses you plan on incurring over the course of a month. This includes a mortgage/rent, car payments, auto insurance, groceries, utilities, entertainment, dry cleaning, auto insurance, retirement or college savings and essentially everything you spend money on.
Make adjustments to your current budget. The ultimate goal would be to have your income and expense columns to be equal. This means all of your income is accounted for and budgeted for a specific expense. If you are in a situation where expenses are higher than income you should look at your “variable expenses” to find areas to cut.
This could mean taking your lunch to work instead of eating at expensive restaurants everyday or canceling the premium cable channels and ordering netflix instead.
Review your current investments. Think about what investments or changes in your current situation you need to change so you aren’t influenced by your current allocation. Your risk tolerance may have changed, so some changes to your allocation may be needed. Or you may realize you need to revise your asset allocation to reach your financial goals.
List each investment and its current value. Total your investments by category — cash, bonds, and stocks — and asset class — large cap-stocks, international stocks, intermediate-term bonds. Then compare those percentages to your asset allocation plan. If you haven’t done this review in a while, you might find that your current allocation is off.
Run a credit check, know your current score. National credit bureau TransUnion recommends using the spring-cleaning impulse to see what areas of your finances you can clean up as well. Are your files bulging with statements from past years? Get your credit score from one of the 3 major credit reporting agencies – Equifax, Experian and/or TransUnion.
Set your financial goals. Your ultimate financial goal should be made with your realistic investing plan with your lifestyle choices and savings in mind. Remember, it’s your responsibility to make your earning work and grow for you!