Spring is recognized as the season of renewal and new beginnings. This is a perfect time to clear out the old and welcome in the new. Over the winter months, stuff may have accumulated in your space and the clutter is taking over. Where there is clutter, there is also confusion.
While many focus on removing the physical clutter, this is also the perfect time to clean up your money as well. When your money is cluttered and unorganized, it is a sign of overwhelm and stress. And overwhelm and stress stops you from building wealth. Now is the time to release the financial stress, bad habits, and everything else that is blocking your wealth.
This article will discuss the signs of financial clutter and strategies to simplify your money so you can build wealth now.
Signs of Financial Clutter
Before you decide that it is time for a change, you must first be aware of the issues. There are many ways to identify if your money is cluttered and needs to be simplified. Below are a few signs to be aware of:
Financial Stress and Anxious
You have heard the quote “Scared money doesn’t make money”, but what is also true is you do not make money when you are stressed about money as well. Money is repelled by stress. It’s a never-ending cycle that can be hard to get out of. But it is possible to break the cycle.
Not Sure How Much You Have Spent and Have Remaining
If the money leaves as fast as it comes, then it’s a sign that your finances are cluttered and overcrowded. Not keeping up with your spending or your expenses is an ineffective strategy to manage your money. You don’t get wealthy by chance. It must be intentional.
Many Debt Payments & Making Minimum Payments
When you have multiple payments, there is rarely any money left to save and invest. It is important to pay what you owe. But when your money is spread across multiple payments, it’s time to streamline. Another sign of cluttered money is only making the minimum payments on debts.
Lastly, a new trend is buy now, pay later subscription service. Be careful with these services because the low payments are enticing but dangerous. Soon you may find yourself making endless small payments and nothing towards your financial goals.
Little To No Progress On Your Financial Goals
It’s possible to have so many financial goals that you do not meet any of them. Often people want to achieve so much in a short period. They want to pay off debt, fund their cash reserves, max out their 401K, invest in their children’s college fund, and buy a house all in the same year.
Yes, I do believe anything is possible. But it is also possible to miss the mark by trying to manage too much at one time.
“If everything is a priority, nothing is.” – Unknown
Action Plan
Now that you know some of the signs of financial clutter, here are some practical steps you can do to simplify your financial life.
Organize Your Space
If your space is cluttered, your mind is cluttered. And if your mind is cluttered, your money is cluttered too.
To begin cleaning up your money, make sure you clean up your physical space as well. By clearing out the space in your environment, you can see what you already have available to you. Oftentimes, people buy things they already have because they forgot they had them. It was buried in all the clutter and created unnecessary spending.
Marie Kondo, a professional organizer, is a good resource to help you tidy up your space. Her method requires you to assess everything that you own by category and decide if it sparks joy or not. If it does not give you joy, then you should let it go.
Going through this process is also a good way to earn extra cash. For the items that you are letting go of, you can sell them on sites such as FB Marketplace, OfferUp, Poshmark, and others. If you decide to give it away, this can be applied to your charitable donations. In both cases, it is a win-win for someone who wants it.
Use What You Have
Once you have cleared the space, you will be surprised to see what you already have. Use them until you cannot use them anymore. Get your money’s worth out of it. This can help reduce your spending and allow you to focus on using your money to advance your money goals.
Organize Your Money
After your space is cleared and you have an appreciation of the things that you have and value, it’s time to review your money. It’s fine to buy the things that you value, but the problem comes when you spend all your money on things that do not further your goals. As you grow, your values and priorities change. It’s important to make sure that your money aligns with your current values.
For example, I am not an avid TV watcher. I prefer to read a book or watch a YouTube video than watch tv. Having cable and movie channels is not something I value so I don’t pay for it. To some people, this is important and their spending reflects it. The disconnect is when you don’t really care about the item but because you have had it for so long, you continue to pay for it. This is a waste of money and can be reapplied to something that you do value.
One of the quickest ways to understand what you are spending your money on is to do a spending analysis. This analysis will provide insight on not only what you spend your money on, but how much you spend and how frequent. Once you see what you are spending your money on, now you must decide if you value it. For more tips on organizing your money, check out this article, Simple Steps To Organize Your Money.
Simplify Your Spending
In addition to simplifying your money, you should simplify your spending as well. Spending can make or break your ability to build wealth. So it’s important to simplify how you manage your money so that you save time and money. One way you can do this is through automation. Automating your regular bills is a good way to always pay on time without you having to remember to do it. Once it is automated, periodically check it to make sure that the right amount is being processed. But free up your time and mental energy by paying your bills automatically.
Another way to streamline your spending is to use one payment source. Most people use a credit card over a debit card due to the added security of a credit card. This simplifies how many payments you make every month BUT credit cards are an easy way to overspend.
If you are already in debt, I highly recommend using cash. Using cash will enforce the discipline you need to reduce your spending and allow the rest of your money to multiply on autopilot.
Related: One Tip To Reduce Your Spending and Build Wealth Faster
Establish Priorities and Stay on Track
Creating financial goals is a great start to building wealth. You are already ahead of most people. To increase your chance of achieving your goals, you want to establish priorities for what you will do first. It is easy to try to do it all at the same time. They are all important goals, but there must be a priority. You must decide what needs to happen first. More times than not, you need to have a cash reserve to fall back on during the unexpected.
After you assess your spending and decide how much discretionary income you have, use this money to accelerate your priority goal.
Streamline Your Debt Payments
If you are spreading your income across multiple debt repayments, it is harder to save and invest. As you are cleaning your finances, now may be a good time to consider eliminating and streamlining your payments. If you can pay off smaller balances quickly, this may be a good option to eliminate an extra bill.
If you are making multiple payments and are barely making traction, it may be time to consider a refinance. A refinance means to finance again. It is an opportunity to restructure a debt payment to either consolidate debts into one loan or reduce your monthly payments.
There are a few precautions I will warn you about when refinancing. If you decide to refinance, make sure that you understand the costs. There are fees such as balance transfer fees or loan origination costs that are fees to process your loan. Another precaution to consider before you refinance is to not accumulate more debt. It is tempting to go back into old spending habits once your money is streamlined into one payment. Don’t do it. If you do, your results will be like it was when you started or worse.
Related: What Should I Do First, Pay Off Debt or Save?
Conclusion
As you begin to clean out your space for the new season, take some time to clean up your money as well. Building wealth does not have to be complicated. You can reach your goals by implementing simple strategies consistently. So, take some time to spruce up and simplify your money to build wealth now. That’s getting your Finances On Point.