Four Steps to Freshen Up Your Finances

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Smart Ways to Manage Your Budget

Have you already filed your taxes, or is Uncle Sam still waiting on you to make that mid-April deadline? Either way, the end of tax season is the perfect time to take a big-picture approach to understanding and improving your financial outlook. The following steps could help you freshen up your finances and make smart decisions this spring.

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STEP 1: CHECK OUT YOUR CREDIT REPORT

With all the data breaches in a modern digital world, it’s important to monitor your credit report on a regular basis to watch for changes, especially any activity that looks suspicious. Benchmarking your scores will help you track changes over time and address anything that’s problematic. Each credit bureau (Equifax, Experian, and TransUnion) allows for one free report per year. You can also get a free consolidated report once per year at AnnualCreditReport.com.

If you’re not sure how to interpret the information on your credit report, check out this Credit Repair Kit. Complete with interactive checklists and actionable tips, it can guide you through the process of reviewing your report in simple terms. Understanding what to look for and how to interpret information is the first step toward improving your credit score.

STEP 2: TAKE A FRESH LOOK AT YOUR BUDGET

At its core, budgeting boils down to simple math. So don’t over-complicate things! Start with how much money you earn after taxes and subtract your fixed monthly costs for things like rent, car payments, insurance, utilities, phone service, food, fuel, and any other essential expenses with known costs. You can easily track and manage everything in Google Docs, iWork, or an Excel spreadsheet.

Be sure to factor in other expenses, like any subscriptions or annual renewals that you only pay once in a given year – just divide the total by 12 to get the average monthly cost. Once you do the math, you’ve essentially created a monthly balance sheet – and hopefully your financial picture is net positive. If it is, perfect – start thinking about what to do with the extra income. You could:

• Put it into a savings account for unexpected expenses
• Increase your TSP contributions
• Open an IRA or invest it elsewhere
• Increase your insurance policy
• Increase payments on outstanding debt to pay down faster

If your net income is in the red, it’s time to clean up your budget and cut back on nonessential or luxury expenses.

STEP 3: DECLUTTER AND ORGANIZE DOCUMENTS

Did you know almost all of your most sensitive personal and financial information can be pulled from just a handful of tax documents? If your paperwork is ever lost or stolen, it could make you a target for identity theft and fraud. You should always make sure your documents are secure, either in a safe or locked cabinet.

It may be tempting to throw out or recycle your old and unwanted documents, but they should really be shredded first. It’s safe to get rid of household bills that are at least a year old. The IRS recommends you hang on to things like tax returns, investment statements, and other supporting documents for at least seven years. And there are certain records you’ll want to hang onto as long as possible, like medical documents and Social Security information.

If all else fails – go digital! Saving documents securely to the cloud ensures they will never be lost or damaged in a household disaster like a fire or flood. Moving to paperless statements is an environmentally friendly and sensible approach to reduce paper clutter around the house.

STEP 4: REASSESS FINANCIAL PASSWORDS

Are your online accounts really as secure as you think they are? Here are some simple dos and don’ts:

• DO change your passwords frequently
• DON’T use the same password for every website
• DO make passwords at least 10 characters long, using a mix of uppercase and lowercase letters, numbers, and special characters
• DON’T use easily identifiable personal information like your name, date of birth, or Social Security Number
• DO choose unique security questions
• DON’T use the same word for every answer

Having trouble keeping your passwords straight? You can use an app with dual authentication to manage them, like LastPass, KeePass, or Dashlane.

This kind of financial audit is important not just during the spring season, but throughout the entire year. Don’t be afraid to take a step back, assess what’s going on with your budget, and think about fresh ways to manage your budget according.

This story is presented by Pioneer Services, the military division of MidCountry Bank, which has provided award-winning financial education to the men and women of the Armed Forces for over 30 years.

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