Spring Cleaning Your Bank Account: How To Spruce Up Your Money Management Skills

“Information for this post is sourced from Genworth Financial in partnership with the SheHeard Influencer Network. All opinions expressed are my own.”

This time of year always encourages me to do a bit of spring cleaning. It always feels so good to get a handle on the house and get to some of the projects that have been stacking up. As I have been working on this “5 Part Financial Workshop” I realized that I need to do a little spring cleaning of my money management system. After using the tips in “part 1: women & finances- overcoming financial anxiety” I am prepared and ready to use some of my home spring cleaning tactics on my finances. 

How to Spruce Up Your Money Management Skills

STEP 1: DECLUTTER

Whenever I decide to do some major spring cleaning, my first step is always to declutter by having a house-wide purge of everything that is not needed or wanted. It always amazes me how many unused clothes, toys and household items we have around the house. I love taking a big bags of those items to donation centers to be put to good use elsewhere.

I decided that my bank account could use that same kind of purge. I wondered how many much money was actually being spent on non-essential items each month, so I decided to evaluate my bank statements for waste and areas that could be purged. I pulled up 3 prior months of bank statements and added up how much was spent on different expenses. I broke it up into categories that would help me evaluate the necessity of each item. For me these where:

• Monthly Bills- all monthly/ reoccurring payments such as rent and mortgage payments, loan payments, insurances premiums and utilities and other monthly costs
• Car- all money spent on gas and car maintenance
• Groceries- all money spent on groceries including baby items and personal care costs.
• Emergency expenses – any money spent on car repairs, doctor’s visits, medication etc.
• Planned extra expenses- any money spent on things that I had planned or budgeted for such as birthday gifts, planned clothes shopping, eating out for a specific occasion, holiday items, vacations etc.
• Splurges- Anything extra that you spent money on that was not planned or saved for such as going out to lunch, unplanned clothes shopping, anything extra.

I did this and found that I was already pretty stream-lined in most areas (which made me happy), but I found that I had spent more than I wanted to in the “splurges” category. Now, let me tell you, I am not the type of person who goes out and indulges very often. We rarely eat out, I don’t go on big shopping sprees, and I think of myself as fairly frugal. However, I had made a lot of small purchases (almost all totaling under $5) that shockingly added up to quite a bit over the 3 month period.

Success! I found an area that I can purge! Maybe I am a bit of a nerd, but this gave me a slight “spring cleaning rush” (the same kind of rush that I get from getting rid of a big bag of old toys that had been cleared from the further-most reaches of my son’s closest). I decided that I would keep some money allotted for splurges (its fun to take the kids out to ice-cream once in a while), but it would be a set, budgeted amount. Splurge purge complete!

STEP 2: RE-ORGANIZE

After decluttering, the next thing that I like to do in my spring cleaning routine is reorganize. Whether its rearranging furniture, working on a new system for organizing toys, or just trying something new, I always feel like reorganizing, helps me to start fresh and gain a new perspective on things. I think the same can be said for our financial spring cleaning and money management skills. For me, this means working on a new budgeting and money tracking method, to help prevent me for falling into the same financial traps that I just “decluttered” in step 1.

To aid me in this, I enlisted the help of the professionals at Genworth Financial. Genworth is a provider of long-term care insurance, wealth management services, life insurance and mortgage insurance. Recently, they have also put together a series of videos and other resources to help “financial novices” such as myself get better educated and organized about money matters. One of their resources is a downloadable “Plan for living workbook.” The workbook is designed to help with retirement planning (which we will be discussing in Part 3) but I found some of the pages useful for budgeting for now!

On page 9, of the “Plan for living workbook”, Genworth has created a very easy to use expense chart. Because we already figured out what we need to spend on each category, go ahead and plug those numbers into the expense chart. Be sure to use the numbers that you want to spend moving forward, as opposed to the number you have been using in the past. For me, under the “discretionary spending” I put in the new amount that I have made a goal to stick with in my “splurges” category.

One piece of advice which I found particularly useful was where it advised, “In some cases, you may think of these costs as one-time, annual costs. Just divide these costs by 12 months to estimate an average monthly budget for planning purposes.” Every year my car registration is due at what seems like the most inconvenient time of the year, and I am always scrambling to come up with the money for it. I thought it was a fantastic idea to actually plan ahead and budget a specific amount to set aside for when it comes due! It would be so useful to do this for all of the annual costs that come up such as birthdays, school clothes shopping. Vacations, holiday spending, and taxes.

STEP 3: SET GOALS

This brings me to the next step, setting goals for the future. Page 15 of Genworth’s “Plan for living workboook” has a strategy worksheet to help you make and accomplish financial goals. The worksheet has 3 categories: Action step, Goal and benefits of the action taken, and expected completion date. I have always heard and found to be true, that a goal unwritten is simply a wish. I find that something about actually taking the time to write goals down, helps me to actually see it as a firm commitment. This worksheet really helps with that!

My goal is to save for my car registration over a 12 month period so I filled out the worksheet accordingly:

ACTION STEP: Put $10 per month into my savings account to be used for car registration

GOAL AND BENEFITS OF THE ACTION TAKEN: Goal is to be able to save $120 to pay for my car registration on-time, benefit is that I won’t have to scramble to come up with that expense and will not get late fees and penalties for paying late.

EXPECTED COMPLETION DATE: June 2014

Now go back and make that goal happen by plugging it back into the expense worksheet page.

STEP 4: TRACK IT!

One of my favorite thing about spring cleaning is that it motivates and re-energizes me to keep up with those things that I just organized. I want to make sure that happens with my financial spring cleaning too! So I came up with a few things that I want to do to keep up with a few ideas of my own to help me on top of things!

• Put together a binder that includes the expense worksheet, the strategy worksheet, and extra pages to track what you actually spend your money on each month
• Schedule a specific date each month to review your finances for the month and track your progress on your goals, you may also want to include your financial partner from part 1.
• Set up a tracking system to track your daily spends. I always have my phone with me, so I found a great free app that helps me keep track of my monthly budget by setting up different “accounts” and requiring me to make “withdrawals” from those accounts as I spend money. For me this is a lot easier then seeing a single amount in my bank account and trying to remember how much of that money is allocated for expenses and how much I can actually spend. This same thing could be set up easily using a spread-sheet program on your computer or simply in a notebook that you set up for finances. Figure out a system that works for you!
• Stick with it! It will feel great to be on top of your finances and not have to worry all the time that your money is slipping away!
• If you mess up (which we probably all will) don’t beat your self up. The reason we have to go on “spring cleaning sprees” is because we have slipped up and want to start fresh. Take that same attitude with your fiances, if you slip back into your old habits, that just means its time to go back to step 1 and spring clean again!

Our homework for Part 2 is to first download Genworth’s “Plan for living workbook” then take the 4 steps needed to spring clean your bank account. Then stay tuned for “Part 3: Retirement Planning for Novices”, where I will be learning what those of us without any retirement resources, know-how or extra income can do to start planning ahead!

Leanne Cox is a guest writer for CleverHousewife.com. She is a stay-at-home mom to two kids, and a credentialed preschool teacher. Leanne teaches “mommy-and-me” and “preschool style” music & movement classes through her business “Little Stars Music & Movement Classes” . She is passionate about encouraging early childhood education through hands on learning and exploration.