Spring cleaning season is upon us – and we’re not just talking about sprucing up the house.
Many people take this opportunity to review their finances and make some changes. But just like some of us tend to go a little overboard with deep cleaning our homes, some will make snap decisions on their budgets.
Take a look at our top 4 tips on what NOT to do when tidying up your financial accounts this spring!
Don’t splurge with your tax refund
Easy, big spender. As tempting as it is to splurge with your tax refund, it’s the perfect opportunity to save those funds in an emergency fund or to pay off some of your lingering debts.
If nothing else, split it up and use a little to treat yourself – and use the rest to take care of business.
Don’t overdo it
There’s no need to try and reinvent the (financial) wheel. Instead, be intentional with your financial goals. Consider implementing the 50/30/20 budget method. According to this system, you’ll devote:
- 50% of your monthly take-home income to needs/essentials
- 30% to wants/fun
- 20% to savings and debt repayment
Don’t close out credit cards
Sure, it may sound nice to have less credit cards, but remember: one of the factors used to calculate your credit score is your average length of credit history. That means that if you close your credit card, your credit history may reflect poorly. Plus, it’s smart to use a credit card on occasion to keep your credit utilization ratio in the green.
If you’re still set on closing a card out because of an interest rate, consider a balance transfer to a card with a lower rate. Not a fan of the annual fee? Simply ask your card provider if you can switch to a card without one.
Don’t forget to reevaluate certain costs
It’s a good rule of thumb to review your auto and life insurance coverage annually. Not only can you ensure that you’re getting the best rate, but you can also make sure everything is accurate and make any needed changes to beneficiaries. Also take this time to review your retirement account to see how it’s performing.
We know that managing money can be stressful. If you are in need of guidance on how to manage your funds, we invite you to stop in and meet with one of our team members! Find a Kansas City Credit Union location near you here.
