Spring is in sight. For many of us that means a Spring clean at home. Deep cleaning the carpets, pulling unwanted clothes out the wardrobe, reclaiming the spare room which has all-but turned into a dumping ground. When was the last time you did this with your personal finances? An annual deep clean of our money is a great idea. We can find out where we can save cash and figure out if our savings are in the best place. Let’s look at how to clean up your finances.
Where Are Your Savings?
This is a good start when you are looking at how to clean up your finances. If you are fortunate enough to have savings, what money are they making you? Interest rates plummeted and you might have been getting 0.1% on your savings. Put into actual maths, if you had £10,000 in a bank account, you’d make a tenner. Interest rates are on the way up though and there are some better rates you can take advantage of. Be sure to switch your savings into an account which is going to make you the most. You could consider investments, or starting a private pension which will likely give you better rates. Remember though, there can be an element of risk involved. Make sure whatever money you have is working for you.
Identify Bad Money Habits
One of the best things to do when looking at how to clean up your finances is identify where you are wasting money. If you look at how much you actually spend on things in a certain year, you’ll shock yourself into stopping. 5 takeaway coffees on the way to work every week amounts to around £800 a year! On coffee! Impulse purchases are along the same lines, another bad money habit. If you spend more than you earn every month, you aren’t being wise with your income. Make a budget, stick to said budget and figure out how to cut back. Stop haemorrhaging money and you’ll be in a better financial position.
A Get A Better Mortgage Deal
How much are you paying every month for your mortgage? You might be able to get a better deal than the one you are currently on. Sometimes the rate you signed up with is higher than what you can now get. If you still have years left on your mortgage deal, this will mean you’ll need to take into consideration early repayment fees. Along with any fees for taking out that new mortgage. Those fees may cancel out any potential savings. Alternatively, you might look at starting to overpay your mortgage deal in order to bring down the amount of interest on the money owed. A better mortgage deal might help you reach your financial goals.
Compare Your Insurance Prices
Do you let your insurance products auto renew? If the answer is yes, you have likely been paying over the odds. Be sure to compare prices and product when your insurance renewals are due. If you are happy with your provider and feel some loyalty towards them, be sure to talk to them about the renewal price and let them know the price you can get elsewhere. They might price match or offer a further discount. Be sure you get the cheapest insurance prices for the policies you need. This is a great way of how to clean up your finances.
The Best Deal For Your Bills
Similar to comparing insurance prices, you need to ensure you are getting the best deal for all the bills you pay. We recently rang our broadband and calls provider and got a better speed for less money! You need to look at the amount of cash you’re paying out every month. Things like mobile phone contracts, gym memberships, travel and even water rates. You might be better of getting a water metre installed, it could save you money. If you travel to work on a bus, is a monthly pass going to work out cheaper than buying daily tickets? Switch to a different gym which gives you a month’s free trial. Even something simple like switching your current account could get you a £100+ bonus.
Check Old Bank Accounts
This one is much like looking down the back of the sofa and finding a few pound coins. Or finding a twenty pound note in your jeans. Check your old bank accounts for any cash you have forgotten about. Many of us switch to new accounts or open new savings accounts and then forget about them. This isn’t how to clean up your finances! You need to keep on top of your financial products! There could be cash in there that can help you this year. Look at what you did in the past for how to clean up your finances now.
Energy Prices Are Worrying People
The energy price crisis has been extremely worrying for many people and we’re entering the time when the price cap will jump. Usually we would be telling you to search around for a cheap rate, however there has been nothing cheap than the price cap. Companies have pulled cheap energy deals and have been selling at a loss, lower than wholesale prices. Hopefully the energy price crisis will turn around and we’ll once again see some competitive deals. Until then, you need to be aware of where you can save energy and hence money. Turn off lights when you aren’t using them. Switch off appliances, put on a jumper instead of turning up the heating! Hopefully we’ll soon be able to re-add energy comparisons to our list of how to clean up your finances.
Build A Financial Cushion
How many times has something happened and you find yourself struggling for the money to fix things. It could be the car breaking down, or an accident at home. Perhaps even worse than that, what if you or your partner lost your job? There have been thousands of redundancies over the last couple of years and suddenly not having an income puts you in a difficult financial position. If you begin to build a financial cushion or an emergency fund, you can be sure that the bills can be covered for a certain amount of time if something was to happen. It could be three months, maybe six months. If drastic life events happen, the last thing you want is the added pressure of financial hardship. Starting a financial cushion which can help in the worst of situations is an intelligent way of how to clean up your finances.
Our personal finance is important. It helps us pay our bills, book our holidays and plan for our retirement. These are just a few ideas of how to clean up your finances this year. Make sure to give your money to due care and attention this year.
