It’s the time of year when the sun is beginning to shine. The brighter, slightly less chilly mornings make it easier to get up and out, and longer evenings can be filled with bike rides, walks, or trips to the park. The temperature starts to rise, washing can be hung outside to dry, and heating and electricity bills get lower (hurrah!)
But when the sun shines like a spotlight on your dirty windows and you start to think of the annual spring clean, why not think about spring cleaning your finances, too?
Step 1: Do the math
Do you really know how much money you’ve got coming into and going out of your bank accounts?
Pull out your payslips, tax credit or benefit award notices and details of any other income. Once you have all of your income details in front of you, convert all the figures to weekly or monthly (or whatever works best for you) and add them up. This will tell you how much money you have to spend.
Gather up all your household bills. Dig out your login details to any online accounts as more and more companies go paperless. Remember, too, that bills might be monthly, quarterly, annual, or anything in between – so make sure you don’t leave anything out! Check that everything you’re paying for is genuine – for example, that you’re not still paying a home insurance policy for an old address.
Check your figures against your bank statements to make sure you’ve remembered everything.
Divide all your spending into broad categories and allocate amounts. Ultimately your budget needs to balance, or (ideally) have more income than outgoings – so you may need to spend some time thinking how you can cut back.
Step 2: Check your entitlements
Benefits aren’t just for the unemployed. The government has pledged to make work pay, so there is help available for those who are working, too.
Did you know that you don’t have to have children to quality for Working Tax Credit? Someone aged 25 or over, with no dependent children, who works 30 or more hours per week on a low income may be able to receive Working Tax Credit. And those aged 60 or over, or aged 16 plus with a disability might also be eligible.
Step 3: Take on the taxman
Most people have a standard personal allowance which means they can earn up to £10,600 tax free between April 2015 and April 2016. But what you might not know is that certain tax allowances can reduce your tax bill if you’re eligible.
From April 2015, couples who are married or in a civil partnership are allowed to transfer a portion of any unused personal allowance to their spouse.
If you’re registered blind in England or Wales (or in Scotland or Northern Ireland you are unable to perform work for which eyesight is essential), or even if you wear a uniform for work or are required to work from home, there may be other tax allowances available to you.
If you receive a P800 tax calculation at the end of the tax year (though not everyone will) be sure to check it carefully. Most people, especially employees who are paid through PAYE and have tax deducted at source, make the mistake of assuming their tax liability is correct.
Whilst employers and pension providers do have a responsibility to take reasonable care and to operate the PAYE system correctly, they, and HMRC, can and do make mistakes – so check for yourself. Ultimately, say HMRC, the responsibility for ensuring you pay the correct amount of tax lies with you.
Step 4: Don’t be too loyal
Although some companies offer incentives for loyal customers, sometimes it pays to go elsewhere. Look at switching energy suppliers, telephone providers, bank accounts, insurance policies, and media packages. Let your existing suppliers know you’re considering leaving and they might let you haggle for a better deal. Just make sure you’re not tied into a contract before you switch or you could end up paying a penalty.
Step 5: Start the diet
So you want a fat bank account and a thin body for summer? Now is the time to stop the emotional spending along with the emotional eating! Step away from the computer as well as the fridge – retail therapy just won’t cut it – and will end up making you miserable at the end of the month when the money is gone.
When you’re shopping, price around and look for cheaper alternatives. Those Chanel sunglasses may look great, but you can still be stylish and stay within budget with that pair from Primark instead!