Spring Clean Your Finances

Check Your Credit Score

Checking your credit score regularly is an important part of managing your financial life, and it should be a priority during this season of “spring cleaning”. You can get a free copy of your credit report each year from each of the three major credit reporting agencies: Experian*, TransUnion*, and Equifax*. You can also use services like Credit Club* or Credit Sesame* to access your report and review your score.

Once you have access to your report, review it for accuracy and any errors that may have been made. If you find any errors, dispute them with the respective reporting agencies immediately. Make sure to track your progress throughout the process and keep yourself informed about the status of your dispute. Additionally, make sure that any changes you make (such as paying off old debts) are reflected in the report. Finally, take a few minutes to review the other information on the report, including any lines of credit you may have open and the accounts where you have active balances.

Automate Your Savings

Saving money is a great way to build up your finances and prepare for the future, but it can be hard to do if you’re not intentional about it. Help make sure that you’re consistently setting aside funds, by automating your savings.

You can set up an automatic transfer from your current account to your savings account each month. You decide how much you want to save and when the transfer should happen, and then the bank will do the rest. This helps you stay consistent with your savings goals, no matter what else is going on in life.

You can also automate your retirement savings.  Talk to your employer or look into a personal pension, ISA or other investment accounts to see what kind of options you have for automated contributions. It may be a good idea to talk to an Independent Financial Adviser if you want to find out more about long-term investing and putting money aside for retirement.

If you want to take it one step further, you can set up multiple savings accounts for different goals. Whether you’re saving for a house deposit, a dream holiday, or a rainy day fund, you can automate transfers from your current account to each account.

Automating your savings is a great way to ensure that your financial goals stay top of mind and that you’re consistently setting aside funds. By setting it up once and forgetting about it, you can save with ease and start to focus on the things that really matter.

Review Your Debt

Firstly review your debt to see what type and amount of debt you have. Gather all of your credit card statements, student loan documents, mortgage papers and what ever other types of debts and commitments you may have. Look at each one to see how much interest you’re paying, the balance and what type of payments you’re making. Consider your repayment options and make sure you’re taking full advantage of any possible tax savings. Then you can prioritise your debts based on their rates and payment amounts. Make sure you’re setting aside enough money each month to cover all of your debt payments, as well as your other financial obligations.

Review Your Emergency Fund

When it comes to managing your finances, setting up an emergency fund is essential. A general rule of thumb is that an emergency fund should contain enough money to cover at least six months of essential expenses, such as rent, utilities, and food. If you don’t already have an emergency fund, now is a good time to start one.

The first step in reviewing your emergency fund is to calculate how much you need to save each month. Start by totalling up your fixed costs (like mortgage or rent payments) and necessary living expenses (like food and transportation). Next, multiply that total by six to get the amount you need to have in your emergency fund.

Once you know how much you should have saved, the next step is to make sure you’re on track to reach that goal. If you are not, then look for ways to increase the amount you put away each month. Consider reducing non-essential spending, such as eating out or shopping for clothes, and instead, use the money for your emergency fund.

Finally, make sure that your emergency fund is in a secure place. A high-yield savings account is a great option as it will earn more interest than a standard savings account while still being easy to access in case of an emergency.  Consider easy access accounts that let you take your money out without penalty.

Spring cleaning your finances is an important part of staying financially healthy and an emergency fund is a key component of that process. Make sure that you are on track to meet your goals and review your emergency fund regularly to ensure it’s working for you.

Update and Prioritise Your Goals

If you want to make the most of your finances, it’s important to review and update your financial goals every year. Start by listing all of your goals for the next 12 months. Make sure that each goal is as specific as possible and that it reflects your current financial situation. Consider short-term, intermediate and long-term goals.

Short-term goals are things that you can achieve in a year or less, while intermediate goals are more achievable in the next 3-5 years. Long-term goals should be those that will take more than five years to achieve. As you list your goals, prioritise them in terms of importance. This will help you stay focused on what is most important to you.

Once you have listed your financial goals, consider how you can make them more achievable. Break down each goal into smaller, more manageable steps that can help you stay on track. For example, if one of your goals is to pay off credit card debt, create a plan that includes making extra payments each month or sticking to a budget.

Finally, evaluate how each goal fits into your overall financial strategy. What kind of timeline do you need to follow? Are there any changes that you need to make in order to reach your goals? It’s also important to remember that financial goals are not set in stone. You can always adjust them as needed or add new ones as you progress.

By taking the time to review and update your financial goals each year, you can ensure that you stay on track towards achieving your long-term objectives. Don’t forget to monitor your progress and celebrate the small successes along the way.

Analyse Your Spending

Analysing your spending is an important part of spring cleaning your finances. To get a good idea of where you are spending your money, it is helpful to take a look at your bank and credit card statements for the past year.

Start by listing all the categories of expenses you made throughout the year. This could include rent/mortgage payments, car payments, food, utilities, entertainment, etc. Once you have the categories listed, tally up how much you spent in each one. This will give you a good idea of where most of your money is going. Some banks may automatically categorise your spending for you. This can be a very useful time saver, but it’s a good idea to check how they have categorized everything as sometimes the bank’s computer can put something in the wrong category.

Take some time to think about which categories you want to focus on. Is there anywhere you can cut back or reallocate funds? Do you need to save more for unexpected expenses? Maybe you want to increase your savings rate or start investing. Having an idea of where your money is going can help you figure out where to make changes.

Once you’ve decided on the areas that need attention, create a budget that reflects your goals. Make sure to set realistic financial goals that you can actually stick to. This will help keep your finances in order throughout the year.

Analysing your spending is the first step in getting your finances in order. Knowing where your money is going will allow you to make informed decisions when it comes to budgeting and saving. 

Final Thoughts on Spring Cleaning Your Finances

Hopefully, this article has given you some ideas on how you can give your finances a spring clean and help to give you a more healthy financial future. Understanding your finances is the first step, then understanding what your goals are and then developing a plan of the best way to get to your goals. Everyone’s situation is different and will have different goals and obstacles to overcome, but by having a better understanding of your situation and a plan to handle it you will be much better equipped to have a healthy financial future.

This article is for general guidance only and not financial advice. For most people, there will be no need to get in touch with a financial adviser for a spring clean of your finances which involves tasks such as running through your household spending and budget and understanding your debt. However, if you have complicated finances or if you have pensions or investments then it may be beneficial to speak to a financial adviser. Financial Advisers that operate as Financial Planners as well will be able to develop a financial plan for you that can help improve the efficiency of you money and better visualise and reach your goals.

Many financial advisers (such as ourselves) offer a free consultation where you can discuss your finances and see if financial advice is right for you and what it may involve and it can also be a good opportunity to ask any questions that you have.

No matter how you go about it, making the first step to getting started on spring cleaning your finances is the most important step.