Who said we only get the chance to spring clean our finances in Spring? There is never a better time than now, to get your finances in order. Like any financial decision, spring cleaning your finances can be daunting and difficult to understand at times. It will take honesty, some research and a lot of organisational skills, but once it is done you can start the next month a fresh.
To help you to delve through the minefield of your finances, here are 5 easy tips:
1. Know your credit history
It may sound obvious, but if you don’t know where your credit history lies then you will not be truly able to understand your overall finances. The first step is to know your credit rating. To get started, this website can give you ‘more‘ information and the opportunity to get your credit report.
Once you have your report, you can work your way through any glaringly obvious red flags. This could be late payments you made in the past, or any CCJs (County Court Judgements). Either way, knowing what you owe to who is imperative. Now you can begin to create a workable budget for the next 12 months.
2. Create a budget
Having a working budget is the biggest step you will take. Many of us create one for the month and then forget about it, or it is too unrealistic for us to actually execute. So, here is how to create a working document that is realistic and can save you extra pounds each month. Start by looking at your incomings and outgoings, listing the major payments such as rent, bills, car payments etc. This will give you a grand total that simply has to be paid.
You will also have a good idea of what you will have left. This is where you can get creative. Maybe you could cut out the morning latte on the way to work. Saving £3 a day may not sound like much, but over a month it adds up to a big sum. Write down all your ideas and stick it to your fridge, on your phone, or anywhere that you can always see it.
3. Go through your direct debits and payments
Our current accounts are full of incoming moneys and outgoings, but do you really know what payments you have coming out anymore? Old gym memberships, phone contracts, that payment to your old landlord for the electric bill – these may be small amounts, but if you don’t have to pay them, then you need to cancel them. Go through your bank statements with a fine toothed comb to make sure that you are not making unnecessary payments.
4. Switch accounts if you are not happy
Many people stick with the same bank, mortgage provider or credit card company for more years than they should. To know whether it is time to change to another bank, you need to know how much you are paying for certain privileges such as the use of your overdraft. If you find, like many of us, that you’re constantly dipping into the red every month, then you may not know whether this will cost you money in the long run, through bank charges.
5. Choose the right savings account
Savings accounts can be a confusing as our current accounts, but many of us simply don’t know what our interest rates are. Now that you are in a position to save, you need to be considering what savings account you open, or whether your current one is giving you enough benefits.
Much like your current account, you need to know what interest you are collecting on your savings and whether or now you have instant access to your money. Once you have these answers you can make an informed decision as to whether you have the right account for your needs.
Good luck getting your finances in order! It is no simple task and if you have any other tips, please share them in the comments.