Spring Cleaning for Finances: Start to Build Wealth
An important yet often overlooked part of Spring Cleaning is taking the time to review your finances. While we’ve written plenty of things about getting out of debt on this blog, many people tend to forget that the reason they need to get rid of that debt is that it’s the biggest drain on their resources. When you don’t have to pay debt every month, you’ll be able to build your finances with the money that you don’t have to spend on debt repayment. While you’re working on this goal, however, it’s important to take a few other steps to work on building your finances this spring.
Ways to Build Your Finances
1. Start a retirement fund. Even if you love your job there’s no getting around the fact that some day you’ll have to stop working. Unless you expire in your office, you’ll need some income for your golden years. If you haven’t already, start contributing towards the retirement plan offered through your employer. If you don’t have a plan, talk to your bank about setting up an IRA.
2. Cut back on your expenses. The key to building wealth is to take steps to hold on to your money. While reducing your debt load is critical for this, it’s also a good idea to periodically review your other expenses. Look for ways to reduce your utility bills, cut back on cable channels and cell phone minutes, and cut back in other areas such as eating out and entertainment. We have a lot of good ideas on how to do this here and here.
3. Save for a rainy day. If you live paycheck to paycheck, you aren’t building your finances. Even if most of your money goes to bills, odds are you can put aside something every month. Even $20 a month can give you enough to cover gas and hotel for a quick trip or a very simple car repair. Once you have even a small amount in a savings account, you’ll be motivated to save more. It will also get a lot easier to build your savings when you no longer have to reach for a credit card every time a new expense comes up.