Spring is in sight and you might have already started your spring clean. While we can’t help you decide which clothes to keep, donate or toss we can help you tidy up your finances.
With 4 simple steps, spring cleaning your finances isn’t that difficult and it can not only help to relieve some stress, you might even find some savings along the way.
Step 1 - Simplify your finances
We all have that drawer in our home, the drawer that becomes a home for the loose batteries and other odds and ends we find laying around. Sometimes, our finances can start to feel that way too. Much like spring cleaning your home, the best place to start with your finances is decluttering and getting organised.
Tidy up your Direct Debits
Take a look at your direct debits, are there services you’re no longer using but still paying for?
When checking through your statements look for any recurring payments. If you have any you don’t want or need cancel them with the provider. Alternatively, if you want the subscription in future, why not see if you can pause it?
Take stock of your accounts
Knowing what your spending your money on is half the battle to tidying up your finances.
Due to changes from Open Banking, the easiest way to identify your spending habits is through using a money app such as Emma, Yolt or Money Dashboard. These apps connect your current accounts, savings accounts and credit cards in one place, allowing you to see your balances and transactions.
They can also categorise your spending and some allow you to set budgets or savings goals.
However, you can always do it the old fashioned way with a paper copy of your statements and some highlighters. Simply colour code your transactions to identify where you’re spending your money.
Step 2 - Tweak your budget
Once you’ve reviewed your spending it can be clear where you could be saving money. Especially if you’ve used a money app, you’ll be able to see from the categories where you’re spending and potentially that’ll give you an idea of where you are overspending.
Challenge yourself, is everything necessary? Are there areas where you could cut back?
The standard rule of thumb is the 50/30/20 method. The idea is that you split your monthly income in the following way:
50% on needs
30% on wants
20% on savings
However, this isn’t a reality for everyone. Instead, your priority should be making sure your monthly income after tax covers your needs:
Mortgage or rent
Utility bills - energy, water, phone contract and broadband
Essential weekly shop
Minimum payments on any credit accounts
After you’ve taken care of your needs you just need to decide what to do with anything left over.
Step 3 - Revisit your accounts
Over time new products and services become available and what once was a great deal may no longer be the case.
Revisiting your current, savings and credit accounts could help you save.
Switching your current account could have instant benefits such as a cash reward to new customers and introductory offers for a set period of time such as higher interest rates, lower overdraft fees, discounts and cashback.
Review your savings account. How you need to access your savings will determine the type of savings account you need. An ISA will give you better interest rates, but typically your savings won’t be instantly accessible. Whichever type of account you choose, check to see if you could be getting a better rate elsewhere.
Transferring your credit card balance. If you’re being charged interest on a current credit card or store card, transferring the balance to a 0% balance transfer credit card can help you clear the debt sooner. This is because your monthly payments will go directly toward clearing the debt, not interest. As long as you make the minimum payments each month and clear the balance before the 0% period ends you won’t pay any interest.
Step 4 - Find savings
There are some quick ways to find savings such as:
Switching your energy tariff. Especially if you haven’t switched before, you could find there are significant savings to be made by switching your energy deal. Even if you switch regularly, by ensuring you review your energy tariff every 12 months (at least) you can make sure you aren’t overpaying for your energy.
Don’t settle for auto-renewals. When it comes to any kind of insurance, loyalty doesn’t pay. While it can be convenient to just allow your car, pet or home insurance to auto-renew you’ll be paying more for it.
Remortgaging. If your current mortgage deal is coming to end, you might find you can save by remortgaging to a deal with a better rate.
Get cashback. Get paid for spending you were going to do anyway. Before making a purchase check a cashback site first, or better yet install a browser extension to make sure you don’t miss any opportunities to save while you spend. Similarly, you can install browser extensions for voucher websites that will automatically check for discount codes before you checkout.
Revisit your phone contract. Could you be paying less for your phone? If you’re happy with your device, it might even be worth taking advantage of a SIM-only deal. Take stock of your recent phone bills and check your usage - if you’re routinely using more or less of your call, text and data allowance you’re paying too much. Finding a deal that better matches your usage is a good way to save.
Evaluate your weekly shop. Are there quick and easy savings to made in your weekly food shop? Switching from big brand items can be an easy way to save on your weekly food shop each week.
Tags: Your Money