As the daffodils begin to bloom and the days grow longer, it’s not unusual for our thoughts to turn to spring cleaning and de-cluttering our lives. Clearing the cobwebs needn’t be restricted to our homes though, and taking a fresh look at your financial situation at least once a year is a good idea. Not only might your circumstances have changed, but the financial products available and market certainly will have, which means your money may not be working its hardest for you.
In this blog post, we’ve outlined a number of spring cleaning tasks to help you tidy up your personal finances, organise your budget, and plant the seeds for a prosperous future.
1. Refresh your financial objectives
Begin your financial spring cleaning by reassessing your goals. As time passes your old objectives may become less relevant, or your priorities may change. Whether you’re saving for a home, planning for further education or a growing family, or building your emergency fund, it’s important to ensure your goals align with your current circumstances. Take note of any new aspirations or changes in your life that might impact your financial objectives, and consider how you may tackle these.
2. Review your personal budget
Dust off your budget and give it a thorough going over. Update your income, expenses, and savings to ensure your spending aligns with your financial goals, then look for areas where you can cut back or optimise your spending. There are plenty of online budgeting tools and mobile apps to make this process more efficient and sustainable, and these will also help you gain insights into your financial habits.
3. Tackle those debts
With interest rates remaining high, the cost of borrowing could slow your progress towards your financial goals. Spring is an excellent time to tackle any lingering debts though, so review your outstanding loans, credit card balances, and their interest rates. Consider consolidating any high-interest debts or negotiating lower interest rates with creditors. Establish a realistic debt reduction plan, with the help of your financial adviser if needed, and allocate a portion of your monthly budget to reduce these as quickly as possible. Prioritising paying off debts with a higher interest rate will save you money in the long run, and help you focus on saving and investing sooner.
4. De-clutter your monthly expenses
Just like a wardrobe filled with things you no longer wear, your monthly expenditure needs to be de-cluttered once in a while. Take a good look at all your outgoings to see if there is anything you can cut back on to free up extra money in your budget for tackling debt or adding to your savings instead. Subscriptions and memberships you no longer use are a regular offender (especially those which lure you in with free trials which you then forget to cancel), so cancel these if you’re not getting your money’s worth. Also evaluate your utility bills, insurance premiums, and other fixed expenses to see if there are opportunities to save by shopping around for better rates.
5. Check on your emergency fund
It’s important to ensure you keep around three to six months’ worth of living expenses set aside in case of unexpected events, such as if you were to lose your job, become unwell, or have to move home unexpectedly. Your financial spring cleaning should include a check on the health of this emergency fund, to be sure it’s not been eaten into, and that there is sufficient for your current level of outgoings. If your emergency fund is lacking, focus on building it up gradually, and consider setting up automatic monthly contributions to ensure consistent progress.
6. Spruce up your investments
It’s important to review your investment portfolio on a regular basis to ensure it aligns with your risk tolerance and financial goals, as well as that your money is working its hardest for you by utilising the best products currently on the market. Consider consulting with your financial advisor to ensure your investments are diversified and well-positioned for growth,and make any necessary adjustments based on market conditions and your financial objectives. Spring is also an opportune time to rebalance your pension contributions, since these are a tax-efficient way to save and it often pays to contribute more than the minimum to optimise your savings.
7. Freshen up your bank accounts
It’s not unusual to collect a number of current and savings accounts over the years, some due to special deals offered on opening, some for their new tempting features. Often though, a few end up being left under-used, or not used at all, and you may find that even those you do use are no longer best suited to your needs. Banks often change the features on their accounts over the years, and your financial situation will certainly change, so check to see that you have the accounts you need and that they suit how you use them. Close any that you don’t need, and consider moving accounts if you’re not satisfied with the ones that remain. Shop around for the best interest rates on your savings, and features that best suit your needs such as useful apps and cash-back options or travel insurance incentives.
8. Tidy up your documents
Staying on top of your paperwork can feel tedious, but it can quickly get out of control if you don’t, so take the opportunity while you’re spring cleaning to get it organised. Creating a system for managing and storing your financial documents will help you keep it tidy moving forward, and help you save time when you need to find things. The same goes for digital filing, which is just as important to keep organised and backed up, so that you can access what you need efficiently. Ensure you shred any unnecessary paperwork and keep essential documents, such as tax returns, investment statements, and insurance policies, in a secure place.
9. Check on your financial protection
Check that your insurance coverage is up to date and meets your current needs, either as part of an annual spring clean or by setting a reminder when each one is up for renewal. Review policies for health, life, car, home and contents insurance, as well as any additional financial protections you take out. Consider shopping around for better rates utilising comparison sites, and adjust your coverage if necessary, either with a new provider or by going back to your existing one to negotiate a better deal. Adequate insurance protection is a crucial aspect of your financial security so it’s imperative to keep an eye on it.
10. Catch up with your financial planner
There’s a lot to consider when tackling a financial spring clean, so speaking with your financial planner can help make sure you don’t miss anything important. Your adviser will also be able to show you the best products available at the moment, including some that you may not otherwise have access to. They can also ensure your plans align with your short, medium, and long-term financial goals.
Embarking on a spring clean of your personal finances can be transformative, and a fresh look at your financial landscape can pave the way for increased security and prosperity. By reassessing your goals, optimising your budget, and implementing smart financial strategies, you’ll be well on your way to achieving a more organised and financially rewarding future. So, if you’re feeling inspired by the season to freshen up your finances, one of our friendly team would love to help you. Book in any time for a free consultation here.
