At this time of year, most of us are dusting off the cobwebs from the corners, opening the curtains up and getting the house freshened up for spring. The annual spring clean is different for everyone, but it usually involves cleaning the house deeper than you do on a weekly basis. Washing walls, cleaning out cupboards, making an effort to clean everything top to bottom. It may also mean maintenance in some places, home improvements like painting the fences, patching up the lawn or getting the roof fixed if there is a leak.
This kind of care and effort is satisfying and results in a feeling of content, as you basque in the glory of your efforts. Did you know the same kind of deep spring clean can also be applied to other areas of your life? Taking a much broader look at something that could do with improving, fixing and changing could be applied to all kinds of things such as your love life, your health, your career and even your friendships or family relationships. In this article, however, we’re going to look at an area of life that we should all be paying attention to regularly: finances.
Your financial life has a great influence on all other areas of your life. How much money you have to save up for big goals like travelling or getting a house, how much there is for weekly groceries, going out, for home luxuries, for holidays – it dictates everything. So it makes sense to give your finances a big spring clean, so they are getting properly aligned with your goals at least once a year. Unsure where to start? Look at these key areas of your finances to freshen them up ready for the rest of the year.
What Is Your Attitude To Spending
Understanding your attitude to spending is incredibly important and will help you with your finances.
Do you go all out on payday only to be left short mid-month? Are you a careful spender who never seems to have any money left despite their efforts? Are you frugal with some things and not others? It is important to understand what your current effort with finances is so you can quickly identify areas of improvement. For example identifying that you are careful with money, but still have no money left at the end of the month tells you a few things. It tells you that you could be living way above your means, you could be spending too much in areas you haven’t checked in a while, or you could be mindlessly spending money without realising, on coffees and meals out for example. Get to know your financial habits, so you can start to make better ones.
Creating a budget is an effective way to get your finances under control. It means you’re more likely to steer clear of debt, to get suddenly hit with emergency costs you can’t afford, gives you better future opportunities because of good credit scores, and it helps you work towards future goals. You will need to take a detailed look at your outgoings and incomings. This could be a scary process, but it will totally be worth it! The Money Charity has a great video tutorial and supporting article to take you through the process of creating a budget for the first time.
Making Financial Changes
When you make your budget, you might realise that things are a little off-kilter. Maybe you’re spending above your means, or you’ve got nothing left to save. This is where you look at incomings and outgoings in loads more detail.
Budgeting once you’ve worked out what the essentials are – commonly known as backwards budgeting – can also help introduce the concept of artificial scarcity – rather than keeping cash too available for frivolous purchases.
What you have coming in could be changeable. We can often perceive our circumstances to be ‘stuck’ but, it is always within our control. You may need a career change to help bump up your income, which could take some planning, but it will be worth it. It may be that you could do some extra work while you work towards a promotion, like online freelancing, surveys or even extra evening work in a local bar or pub. If you slim down all your outgoings as much as possible and you’re still left short, it is time to seriously change your earning potential.
This is where you can make the most changes because this is how you spend your money. Start at home looking at all your essential bills. Your mortgage, rent, utility bills etc. Look at each individual expenditure and analyse whether or not it can be trimmed. There is usually room for some sort of saving on every single type of bill. Utilities are a major area to improve because companies are always changing prices and offering competitive rates. It will take an afternoon of work doing things like calling your electricity people to haggle your bills down, or calling your phone network provider about a deal you have seen.
Once you’ve done all the essentials, you’ll be in the realm of personal spending. Your coffee’s, meals out, clothes – everything you don’t need, but want. This is where you need to become frugal. You can save a ton of money with very small changes. Getting your nails done once a month rather than every two weeks. Changing your takeaways to fakeaways, even cutting your daily Starbucks could save you a ton. If you have a £2.85 latte every morning for every work day in a four week month, you could save nearly £60 just by taking your own flask into work or making your own drinks in the company kitchen. Your outgoings are much more within your control than you realise.
Credit cards, store cards and personal loans can be a great sense of worry and may ruin any good intentions you have for saving. You might feel trapped, and like you will never be able to get out of your current financial situation. Luckily, there are many, many sources of advice for you to take advantage of to help you get rid of your debt. You do not have to go through this alone. Here are just some useful services and sites to take advantage of:
The first step may just be chatting with trusted friends or family members about your debt problems, to take the first step towards sorting things out.
According to recent statistics, UK households are saving less than they have in a long time. That doesn’t mean that we shouldn’t all aspire to save for emergencies, rainy days, big goals and even annual treats like summer holidays. Saving up could seem like a distant dream, but with all your hard work on your finances so far, you should be able to see a savings window somewhere in the future. It might be you have to clear debt before you can save, or perhaps you can only save small amounts. Setting up a savings account is an amazing first step towards your goals, so any efforts to get there should be celebrated.
Taking an honest and proactive look at your finances could be the best thing you do for yourself and your family this year. Take a weekend aside for a deep spring clean of your outgoings, incomings and plans for the future, and your financial forecast will be so much brighter for 2018.