Hello, sunshine! ☀️
March 20, 2022 officially marked the start of Spring 💐 the universal signal to do some spring cleaning – and at Rocket Money, that includes your finances! So in celebration of the new season, here are five ways to clean up your finances for Spring:
1. Review your budget 📲
Spring is a great time to review your budget, not only as a quarterly review but also because the types of things you spend money on might change with the season. Some categories to review in particular include transportation, energy costs, dining out, and entertainment.
Here are a few ways your budget might change:
- Transportation ⛽️: do your transportation costs change with the weather? For example, your costs might increase if you tend to drive more frequently once the weather improves, in addition to rising gas prices. Make sure to account for any changes in your budget. On the other hand, if you don't drive, you might rely less on car services like Uber or Lyft, and more on public transportation, biking, or walking as it gets warmer. Adjust your budget accordingly in the "Manage Budgets" section of the app.
Need more savings to keep up with gas prices? Use Rocket Money to cancel any subscriptions you don't need right now or negotiate a bill to lower your costs.
- Energy costs💡: energy costs tend to be higher in the winter and summer months when people use air conditioning and heating the most. To avoid any surprises over the next few months, review your most recent utility bill to make sure your budget still feels comfortable. You can also use Rocket Money to see how much you spent on heating and cooling costs last year by reviewing the Bills & Utilities category in the app.
- Food and entertainment 🌮 : spending a bit more on food and entertainment now that it's warmer out? While it can be easy to increase your spending on things like food and entertainment as the weather improves, you can also take advantage of the warm weather with more affordable options to reduce your spending. For example, you can go to a park with friends or enjoy a picnic with family instead of eating out to reduce costs.
With a bit of creativity, there's potential to bring your spending down in the warmer months. If you do prefer to spend a little more eating out, take this time to adjust your budget accordingly.
By reviewing each of these categories, you'll be one step ahead of your spending for Spring. You can also take this time to review your recurring subscriptions in case there are any you'd like to cancel in the warmer months.
2. Automate your savings 💸
Setting up automatic savings is one of the easiest things you can do to build strong money habits, making it one less thing you have to worry about doing each month. Rocket Money makes this easy with three simple steps:
- Using smart savings, select a savings goal, like an emergency fund 🚨 or a new car 🚗
- Let us know how you would like to save: we can transfer money automatically based on what we know about your spending habits, or you can choose a custom amount to save every month – it’s up to you!
- Watch your savings grow! That's it... it's really only two steps 😉
Click here to set up your smart saving account now.
3. Start a sinking fund 💰
Entering Spring means you're one season closer to when Americans spend more than they do all year – the holiday season. While it may seem far away now, Spring is actually a great time to plan for expenses that occur later in the year. According to the National Retail Federation, in 2021, Americans planned to spend $997.73 on holiday gifts and related expenses; almost more than what the average American made in an entire week last year. This is where setting up a "sinking fund" can come in handy.
What's a sinking fund?
A sinking fund is a savings account designed for irregular, revolving expenses – things like vacations, holiday shopping, annual insurance premiums that you spend on every so often, but not every month. This makes Spring a great time to set up a sinking fund because you still have a few months to plan ahead.
Here's how you set one up:
- Figure out how much you'd like to save for that expense and divide it by 12 (for 12 months in a year)
- Make sure you can fit that amount in your monthly budget by visiting "Manage Budget". Can't fit that amount in your budget? Let us help you cancel a subscription or negotiate a bill.
- Once you have the monthly amount, set up a smart savings account or automatic transfer to your preferred institution in the "Manage Budgets" section of the app or Rocket Money web.
- Whenever that expense rolls around (for example, holiday shopping), you can use the money in that account and restart the cycle with your automatic savings.
You can set up a sinking fund using smart savings too.
4. File your taxes & maximize your refund 🤑
While Spring is a welcomed change from the winter months for many, it also comes with a downside – filing your taxes by April 18, 2022. Rocket Money tries to make this easy by helping you categorize tax-deductible transactions, as well as export your transactions if they are easier to view in Excel format. If you haven't already filed your taxes, consider starting or increasing your contribution to an individual retirement account (IRA) – the maximum contribution for the 2021 tax year is $6,000 per person, giving you major tax savings compared to a standard taxable investment account.
Already file your taxes and get a refund? Nice! Maximize your refund by putting a portion of that refund to accelerate your debt repayment or start/transfer to your favorite savings goal.
5. Level up your financial education 🤓
Looking for more ways to spring clean your finances? You're in luck! Spring is a great time to level up your financial knowledge because it's also Financial Literacy month! So in honor of our favorite month here at Rocket Money, we've listed a few places you can go to learn more about how to manage your money:
- Visit the Rocket HQ Learning Center – your one-stop shop for learning more about how to improve your credit, save for home, and the steps to homeownership. Our improving credit guides is one of our favorites! Check it out here.
- New to Rocket Money? Check out the other articles we have on the Rocket Money blog, including recent posts on tackling your debt, maximizing your tax refund, and more!
- Want to learn more about how to use Rocket Money? Visit our Help Center for all the go-to guides and support you need
- Still have questions? Reach out to our customer support team in the app and let us know what you'd like to learn more about!
We hope this article helps clean up your finances for Spring and be on the lookout for more from Rocket Money as we celebrate Financial Literacy month with you!