As the weather warms up, the days get longer, and with COVID-19 vaccination continuing to ramp up nationwide, most of us are starting to feel a sense of relief. We are spending more time outside reconnecting with friends and families, caring for our yard and cars as well as the exterior features of our home.  Some of us also find ourselves cleaning more inside this time of year, as this season tends to spark motivation to declutter and organize.

Spring cleaning can have positive mental health benefits and our spring cleaning strategy can serve as a way to support others.  Now is also a great time to spring clean our bank account to get the next few seasons of our life headed in an organized and controlled direction.  Taking the time to review our financial transactions and analyze spending habits can help us spot possible errors and fraud as well as improve our overall financial well-being. Let’s gather our last six months of bank statements and LET’S DO THIS!

Quick Scan

Let’s start with the first transaction on each statement and scroll our eyes down the page.  Let’s stay alert to anything that jumps out such as large purchases or checks or vendor names that we might not recognize. For each item that catches our eye, let’s make sure that we can recall the transaction.  If unsure, contact the bank to determine if this is a fraudulent charge. This is a good habit to practice regularly to protect ourselves from financial fraud and identify theft.

Analyze Discretionary and Variable Expense Categories

Let’s review the April statement since this is the first full month of spring, in whatever preferred format and let’s create four categories of costs:

  • Food Shopping,
  • Dining Out (including take-out),
  • Online miscellaneous purchases, and
  • In-store miscellaneous purchases.

Once we have the totals, let’s perform the same exercise for February 2021 since this was past holiday spending but also the last month before the weather, and increases in the COVID-19 vaccine availability, started to change our daily habits. Next, let’s line these numbers up next to each other to see the variances.  Using the example below, let’s consider what questions to ask as we evaluate the changes:

 

 February April Variance
Food Shopping$475$400($75)
Dining Out (take-out)$120$300$180
Online Misc. Purchases$300$300$0
In-Store Misc. Purchases$200$400$200
Total$1,095$1,400$305

Here are some questions to think about as we try to make adjustments to our spending over the coming months:

  • Because of winter weather and more restrictions on restaurants, were you eating more at home in February than you were in April which ended up costing an extra $180 ($300-$120). Are you eating out more because you are starting to return to normal activity or is this just a spike as you enjoy some of the eased restrictions? Do you want to slide back a little to eating at home more to save money?  Are you eating out more days a week than your budget allows?
  • During the pandemic, your on-line purchases may have dramatically increased but stores are now open and you can get out and physically shop this spring. Your online shopping has stayed the same but your in-store purchases have increased. Additionally, your overall miscellaneous expenses have increased by $200 ($700-$500). Now that you are able to visit stores in person, do you need to cut back on your online purchases? Are the purchases you are making in-store needs or wants?  What changes can you make to your shopping habits to bring your spending down to February levels (or even lower!)?

Asking questions like these will lead to changes in your spending habits and ultimately save you money each month.  Performing this exercise at least once every six months will keep you in tune to how you spend money and enable effective budgeting. For help understanding your expenses and building a budget, call us at (800) 642-2227.  We are eager to help you improve your financial health.