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10 tips to help spring clean your finances
1. Evaluate your current financial situation
Take some time to sit down and take stock of your current financial situation. What are your debts or outstanding commitments currently? How much money do you have saved? What are your monthly expenses? Understanding your personal financial situation can be the foundation for putting plans into place and will give you a good starting point for spring cleaning your finances.
2. Make a budget and stick to it
If you don’t have a budget, now is the time to make one. Once you know how much money you have coming in and going out each month, you can identify erroneous payments or look at where you may be overspending. That will help you make adjustments to ensure your spending aligns with your income.
And be sure to stick to your budget – it won’t do any good if you create it and then don’t follow it.
3. Review your insurance and protection
One important aspect of spring cleaning your finances is reviewing your insurance and protection arrangements to make sure you’re adequately protected in the event of the unexpected. From life insurance and critical illness cover to income protection and medical insurance, make sure that you have the cover you need should an emergency occur, to ensure both you and your family are fully protected.
Another consideration to help cushion any unexpected loss of income would be to build up a cash fund, enough to cover 3-6 months’ worth of household bills and living expenses. If you don’t have this in place already, it’s worth thinking about starting to plan.
4. Eliminate debt
If you have debt, now is the time to start paying it off. Rising interest rates could mean your savings earn more, but if you still have some form of debt, your regular outgoings could increase too as rates rise. Creating a plan to pay off debt with the highest interest rate first can improve your finances over the long term and free up money to save for your future.
5. Review your portfolio and make changes if necessary
Successful investing isn’t just a question of allocating your savings to various assets and then sitting back to wait for the profits to roll in. Failing to keep a close eye on your investments could see you inadvertently expose yourself to more, or indeed less risk than you bargained for. And your circumstances may change over time, affecting your financial aims and risk profile.
6. Plan for retirement
Whether your retirement is years away or you’ve already retired, keeping on top of your pensions is important. If you’re still paying into a pension, reviewing your contributions and forecasts can help give you an idea of whether you’re on track for the retirement you want, or if you need to take additional steps. If you haven’t started planning for retirement yet, now is the time to do it. Start by calculating how much money you’ll need to have saved by the time you retire, and then create a plan to reach that goal. It may seem like a lot of work, but it’s definitely worth it in the long run.
7. Estate planning is important for everyone, not just the wealthy
No one likes to think about a time when they’ll no longer be here, but it’s important to have an estate plan in place. This includes drafting a Will, setting up Powers of Attorney and designating beneficiaries for your investments and insurance policies. If you don’t have an estate plan, now is the time to create one.
8. Review your beneficiaries on all accounts to make sure they are up to date
Another important aspect of estate planning is making sure your beneficiaries are up to date on all of your accounts. This includes your bank accounts, investment accounts and insurance policies. If you haven’t reviewed your beneficiaries in a while, now is the time to do it.
9. Stay organised and be disciplined with your finances
The key to successful spring cleaning of your finances is staying organised and being disciplined with your money. This means setting spending limits, tracking your expenses, and avoiding unnecessary purchases.
10. Give yourself a financial checkup at least once a year
Finally, just like you go to the doctor for a physical checkup every year, you should also give yourself a financial checkup at least once a year. This means reviewing your budget, debt payments and savings goals to make sure you’re on track.
By following our 10 simple tips, you can get your finances in order this spring. So, what are you waiting for? Get started on your financial spring cleaning today!
The Financial Conduct Authority does not regulate advice on Estate Planning or Will writing.
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
Some forms of debt carry penalties for early repayment, it may not always be appropriate to repay debt earlier than agreed. You should always consider any penalties or early repayment charges, along with any other associated costs when deciding the most cost-effective approach to managing debt.