Spring has well and truly burst onto the scene this year. And since saying goodbye to gloomy evenings and frosty mornings (we won’t miss you!), plenty of you have been arming yourselves with a roll of black bin bags and your most ruthless attitude ready for your annual spring clean. While traditional spring cleaning is a proven stress-buster, at Savoo we’re ditching the feather duster and Mr Sheen in favour of a less traditional clear out – a financial one. Here are our favourite ways to dust off your finances ready for a new year.
Create a budget if you’re not already following one
There’s no better feeling than being in control of your money. Creating a realistic budget is the first step. Budgeting does require a little extra effort but doesn’t mean you have to stop having fun or give up the things you love.
Not only does budgeting keep you on track with your money goals, but it gives you a clear idea on your financial priorities, meaning you’re less likely to spend unnecessarily on things you don’t need. Check out this nifty online budget planner from Money Advice Service.
Consider joining a new bank
If you’re not convinced by your current banking provider, switching is easier than you might think. In it for a free intro cash bonus? or perhaps you want a better deal on your overdraft. Either way, switching banks can often mean better perks, free extras or better interest rates.
Big banks like HSBC and RBS may offer up to £175 simply for switching. Then there are app-based banks like Starling, Monzo and Revolut that provide revolutionary insights to help you manage your cash on the go. Remember that cash incentives shouldn’t be your sole reason for switching and to always read the small print.
Take the first steps to eliminate any debt you’re in
Being in debt is a huge financial burden that can stop you from moving forward in life. The first step is to list your debts with their interest rates. It won’t be easy, but knowing where you stand is essential to get the ball rolling.
Next, create a monthly payment plan starting with the highest APR balances. Brendan Harkness from Credit Card Insider says: “If you have an account with a high interest rate, for example, you can transfer its balance to a card with a lower interest rate — and therefore spend less in interest over time”.
Creating a plan that’s both realistic and manageable is key. Anything too overambitious could leave you taking out additional loans to get by day-to-day, getting yourself into an even worse financial rut.
Founder of money saving blog From Pennies to Pounds, Francesca tells us her first steps towards being debt-free:
“When I was getting started with paying off my debt, I made sure I knew exactly how much I had. Then I set to finding out if I could do a 0% balance transfer on any of them. I managed to combine two of my credit cards onto a 0% credit card.
“I made a note of when the 0% interest would run out, and tackled that card first. My loan did actually have a higher rate, but psychologically paying off the card first worked best for me.
“It’s important to have a plan. You don’t want to find out you’ve ended up paying higher interest rates. The main things that helped me pay off my debt was working to a budget and earning extra money on the side.”
Start thinking about your future
Once you’ve settled any debts, setting up a savings account may be your next step. A savings ‘pot’ can be useful for anything from a house deposit to a rainy day emergency fund. Putting money aside to help you reach your goals shouldn’t leave you out of pocket either.
Start small – even saving £3 a day for a year will leave you with over £1,000 to play with. How about the 50-30-20 rule – a really simple way to allocate your money based on what’s important to you. Opening a savings account like a lifetime or help-to-buy ISA to get the most out of every penny. Check out this comprehensive guide from Which? to help you get the best deal.
Switch to online statements and set up mobile banking
Fed up of ten-year old bank statements cluttering up your home? Five years ago it may have been considered savvy to keep a copy of every bank statement, but these days it makes much more sense to go paperless.
Not only do online statements free up storage space at home, but they’re good for the planet too. Set up your mobile or online banking to keep a digital, downloadable record of every bank statement in one handy place. Plus you can also transfer money, pay your bills and check transaction history from the comfort of your sofa.
Re-evaluate your pension plan
Pensions are by no means the most glamorous or exciting thing to be thinking about, but regularly reviewing your current plan could mean better financial comfort after retirement. Your current investment strategy and financial situation are probably different to when you first set up your pension, and so your payments should be updated accordingly.
Those nearing retirement should consider changing to a low-risk option to maximise savings. Meanwhile, those with plenty of working years left in them can afford to be a bit more risky. Ben Willis, head of research at Whitechurch Securities told Moneywise:
“Those with less than five years until retirement, unless they are very high risk, should be looking to safeguard their pension and the general rule of thumb is to hold nothing in equities but instead hold a mix of lower risk asset classes.” Remember to speak to a financial advisor if you’re unsure.
Check if you’re eligible for a tax rebate
If you’re employed you might’ve been paying too much tax without realising, and you could be owed hundreds from the taxman in overpaid tax. Double check your pay slip or look out for a P800 form from HMRC in the post which you’ll get if you’re owed a rebate. They’re usually sent out in April after the end of the tax year. If you haven’t received a letter in the post but still think you’re entitled to a refund you can claim easily on the government website.
See if your credit score needs improving
Credit scores are used to predict your future behaviour. They’re considered for everything from mortgages to phone contracts. You can check yours for free every month at Experian.
You can improve your score in as little as 30 days. According to the experts at ClearScore, using a credit card occasionally for small payments and keeping your credit utilisation low are just some of the ways you can turn your score around. Remember, having no credit history is as bad as having a poor credit history – so get your name on some bills too, if possible.
Automate your bill payments to avoid late payment fees or amounting debts
We all know late bill payments are a killer for your credit rating – not to mention late fees that leave you even worse off. Don’t wait for the utility company to remind you! Setting up automatic payments or direct debits is a quick and easy way to take control of your outgoings.
Plus, it means you’ll never be hit with those pesky late fees either!
Cancel unused subscriptions
From that expensive gym membership you stopped using in January to the Amazon Prime subscription useful for one important birthday present – we’re all guilty. Now’s the time to take stock of your subscriptions and get rid of any money-guzzlers you don’t need.
Search for better deals on utilities
Use websites like CompareTheMarket and uSwitch to find out if you’re overpaying for broadband and utilities. Switching is so pain-free these days you’d be foolish to stick with a more expensive provider out of ease. Plus, when it comes to telly and wifi packages, think about if you truly use everything you’re paying for. Consider switching to less channels or a slower download speed if you’re not benefitting from the premium package.
Reclaim lost money with sites like My Lost Account
It’s highly unlikely you’re sitting on a metaphorical goldmine, but it is likely that you could have money in dormant accounts that you’ve forgotten about or didn’t know existed in the first place.
My Lost Account is a free tool that can track down lost bank and building society accounts in just a few minutes. It’s a great way to track money that may have been ‘lost’ through banks merging or closing. Give it go to reclaim that money you might be owed.
Unsubscribe from tempting marketing emails
This suggestion comes from money-saving blogger Faith Archer, founder of Much More with Less.
“Cleaning up your email inbox by hitting ‘unsubscribe’ on marketing emails is a good way to remove temptation! You can always search for deals and sales in future, rather than being prompted into spending right now.”
We completely agree Faith! Even though newsletters from your favourite brands can be a great way to keep up-to-date with the latest discounts, it can be all too tempting to buy things you don’t really need.
We’re by no means against traditional spring cleaning – but clearing out your finances for a fresh start can help you take control of your finances. Don’t just wait for spring to come around each year to take stock. It’s good practice to review your outgoings and incomings whenever your situation changes – whether it’s a pay rise, a new savings goal or a baby on the way. This spring, take the first steps to financial control. Have a look at our finance offers and vouchers to get started.