You can spring clean your finances at any point but, with the new financial year upon us, now is a better time than ever to get those finances in order.
Spring has sprung! The weather has become warmer, the nights are longer and it’s time to get the windows open and get some fresh air back into the house.
Spring cleaning (in fact any cleaning) is not really on my list of priorities but a good clean makes everything feel fresher.
Each year, we have a deep clean of the rooms, have a look through our wardrobes and sell old clothes or recycle them if we can, and we have a good clear out of anything that has been sitting unused for the last few months.
Spring Clean Your Finances
It’s not just the house that could do with a regular deep clean. Now is also the perfect opportunity to spring clean your finances and prepare for the financial year ahead.
Tidy up your budget
I’m hoping you have a budget to begin with but, if you don’t, then note down your income and expenditure to make sure you have enough to tide you over from month to month.
You can either use a spreadsheet to tally up your spending, write it down on paper and do the sums on a calculator or use an online budget planner tool. Once you have your budget in place you need to make sure you can follow it otherwise your hard work in putting together will be pointless.
Once you have a budget in place, have that spring clean and see what you can cut out to make a saving.
It’s also a good opportunity to check any direct debits, standing orders or regular payments you have set up and make sure that you are still paying for something you use. If you signed up to the gym (with all good intentions for a New Year’s Resolution) but have only been once, maybe now is the time to have a chat to see if you can cancel it – and try these free gym alternatives instead.
Spruce up your current account
When you know your budget is in order, you then need to have a think if your current account is working for you. If you have an overdraft, and you’re using it on a monthly basis, you could be paying over and above what you need to.
Ultimately you want to clear it but, as an initial fix, you could look to change your current account to one which has a lower overdraft rate or, even better, one which offers a 0% overdraft fee.
The Santander 123 current account has a 0% EAR (variable) Arranged Overdraft and there is no arranged overdraft usage fee for the first four months, plus a wide range of cashback is given on certain household purchases. Alternatively, the Nationwide FlexDirect account offers a 0% interest rate and a fee-free overdraft for 12 months.
Check out uSwitch to get a comparison on the best available current accounts.
Dust off your forgotten money
You may have dormant bank accounts just sitting there with money that you’ve forgotten all about. Well now is the time to trace them and get your money back.
My Lost Account is a free service that was set up by the British Bankers’ Association, the Building Societies Association and National Savings and Investments. You can use it to track any old bank accounts or savings accounts and get reunited with your cash.
If you’ve switched gas and electricity providers in the past you may have money sitting in a dormant utility account too. This scheme mostly works with the “big 6” energy providers but you are guaranteed a refund if you have made overpayments in the past.
After checking your old accounts, also remember to check the pockets of your winter coats before you put them away for the season. Have a good route through the pockets and check for any loose change or cash you may have left. If there is any loose change then add it to your piggy bank savings.
Clear away your debts
Although the festive season is well and truly over, if you got into debt because of Christmas, it may be the ideal time to rid yourself of the debt for good.
There are many different ways you can look to clear your debt, depending on your personal circumstances.
You could set up informal arrangement with your creditors, which will mean you having to individually negotiate with the creditors or make offers of a full and final settlement. Or you could enter into a Debt Management Plan (DMP) where you pay an agreed amount each month and ask the creditors to freeze your interest.
You could try an Individual Voluntary Arrangement (IVA), you could enter into bankruptcy or you could apply for a Debt Relief Order (DRO).
Whatever you look to do, it’s best to get free and impartial debt advice, best suited to your own finances.
At the same time, don’t settle with your current situation – look to increase your income by asking your boss for a raise, getting a higher paid job elsewhere, applying for a part time job, or starting a side hustle.
Sweep up expensive bills
Get your bills out and check what you are currently paying for your gas, electric and even you home phone, TV (if you pay for it) and broadband.
It could well be that you can make a huge saving if you switch providers, leaving you with more cash in your pocket.
You may well find you get a better deal if you bundle your phone, TV and broadband together and you can use a comparison site like Broadband Choices to find all the best broadband offers out there. Make sure you check you are on the most competitive rate for your gas and electric as you could save £234 per year by switching!
Puff up your savings
So now you have started to get your budget and debts sorted, you know what bills to get in check and you can find any money that’s lost. Next you need to make sure your savings are getting the right attention.
A savings account may have a good initial interest rate but after the introductory period, the bank will most certainly drop it to a low rate (I know the interest rate on my savings account plummeted after 12 months!).
With the start of the new tax year, there are normally some good rates around. Whether you are looking for a fixed rate savings account or a cash or stock and shares ISA, you could find a rate that works for your money.
Alternatively, you could use a current account to save your money as many of them offer a high rate on your savings too!
Nationwide FlexDirect (as well as being good for your overdraft) offers 5% interest on balances up to £2,500. If you don’t have a need for an overdraft (as it’s a high charger!), why not look at the Halifax Reward current account. It pays £5 per month cashback, plus has another cashback scheme in place and you get £100 for switching! Or, the TSB Classic Plus offers 5% AER on savings up to £2,000 (but it has an interest rate of 19.94% on your overdraft).
Again, check out uSwitch to have a look at all the offers available.
Mop your brow of money problems
It can be tough getting to the bottom of your budget as well as sorting your debts and finances out. Remember though that it’s definitely worth the effort and gives your household finances a sparkling shine.
If things are unmanageable and you are struggling with your finances don’t struggle alone. Get free advice from Step Change, National Debtline or Citizens Advice. They will give you the support you need for any current or future money problems you have.
Penny for your thoughts: Are you going to spring clean your finances this year or are you already on top of things?