When was the last time you decluttered your finances? This might be an unfamiliar term. But you likely declutter your home or your car on a regular basis — so why shouldn’t you declutter your finances, too?
Here’s how to start the new year with a clean financial slate that will help you as you navigate your financial journey and seek to achieve financial security.
What Does It Mean to Declutter Your Finances?
Decluttering your finances is the process of simplifying and organizing your financial life by eliminating unnecessary or unused elements. For example, you might declutter your finances by:
- Reviewing and optimizing spending habits
- Cutting down on unnecessary expenses
- Organizing financial accounts for better visibility and control
The Importance of Starting the New Year With a Clean Financial Slate
If you’re cleaning out your home, you might focus these efforts in the springtime. But for financial decluttering, we recommend doing this work around the start of the year. This helps you align your financial goals with your priorities in the new year — such as saving for a major purchase, investing or paying off debt.
Other benefits of financial decluttering include:
- Improve your overall financial health by understanding your financial situation and taking control of your money
- Reduce stress (financial clutter, like debt or disorganized accounts, can contribute to stress and anxiety)
- Create a solid foundation for effective financial planning
- Make informed decisions about budgeting, saving and investing
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7 Tips to Declutter Your Finances
Ready to start the new year off on the right financial foot? Take a look at our top seven tips to help declutter your finances.
1. Set Clear Financial Goals
Start by setting financial goals for the year. Each goal should be measurable and achievable. You can also add a mental deadline to keep you motivated to work toward them.
What kind of goals should you set? Maybe you want to save a specific amount, or you want to cut down on non-essential expenses. According to PwC’s Global Consumer Insights Pulse Survey, 69% of consumers plan to cut back on nonessential spending over the next six months. 15% of respondents want to stop buying nonessential items altogether.
Throughout the year, you can reassess your goals depending on how your financial situation may have changed.
2. Use A Budget App or Tool
An app or other digital tool is a great way to help you stick to a budget. Our recommendations include:
- You Need A Budget (YNAB). This app uses a zero-based budgeting approach where you allocate all your funds to your expenses.
- PocketGuard. PocketGuard gives you an overview of finances; tracks expenses; and helps you plan for upcoming bills.
- Monarch Money. This app tracks your accounts, budgets and investments.
Apps like these can help you review your personal financial situation and be aware of the purchases you’re making.
3. Assess Your Monthly Subscriptions
Your subscriptions might only be $10 or $15 each. But monthly subscriptions can add up fast. Data from C+R Research in 2022 shows that the average consumer spends $219 per month on subscriptions — which equals out to $2,628 per year. That’s a significant chunk of change! What’s more, consumers in the study were not aware they were paying that much.
As the new year approaches, this is a great time to identify services you no longer use or need. Consider subscriptions you might have to fashion or cosmetics services, grocery or food delivery, streaming services, premium memberships or health products or supplements. Be particularly aware of subscriptions that auto-renew, which are easy to forget. Check your bank statements for recurring changes if you aren’t sure which subscriptions you have.
Reviewing your subscriptions promotes financial awareness. You can make conscious, informed decisions about where your money is going. And when you unsubscribe from services you don’t need, this money can go straight into your savings — or be redirected toward more meaningful financial goals.
4. Manage Recurring Phone App Fees
Many phone apps have subscriptions, too. Others might appear free at first but offer in-app purchases. Just deleting the app won’t cancel your subscription. You need to:
- Check if you have a premium plan or version of the app
- Check your app store purchase history to cancel your subscription from there
- Contact customer support if needed
5. Set Up an Emergency Fund
If you don’t already have an emergency fund, make this one of your goals for the new year. This should be separate from your other savings accounts. It’s intended to cover unexpected, emergency expenses like medical bills or car repairs.
An emergency fund should have a minimum of 6 months to one year’s worth of expenses. You can track your contributions to the fund with a budget app.
6. Monitor Your Credit Score
Your credit score is an important indicator of your financial health. It affects loan approval and rates. It also affects your rent and mortgage. Check your credit score on a regular basis this year.
Credit reporting agencies like Equifax or TransUnion will show you your credit score. Your bank or other financial institution might give you your score, too. Make sure to check your credit report for accuracy.
7. See a Financial Therapist
Financial therapists are trained professionals who help you understand your finances while also providing emotional support, similar to what a traditional therapist would offer. They can:
- Advise you on your spending and investing
- Address the stress you may have from your financial situations
- Work with you to reach your financial goals
You might consider seeing a financial therapist if you struggle with your feelings and attitude toward money, and if these emotional obstacles are preventing you from getting a healthy financial plan in place.
Financial Health in the New Year
There’s no time like the start of the year to reassess your financial situation and move forward with solid goals. Canceling subscriptions, starting an emergency fund and considering professional help are a few of the best financial decluttering tips for 2024.
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