Spring clean your finances

Money 2020-3-23

Get your finances in order for the new financial year with these top tips.

With the start of the financial year approaching, this is the best time to sit down with your finances and get organised. Here are our top tips to help you.

Close any old unused accounts

When it comes to having multiple bank accounts, it can start to get tricky to keep track.

Have a look and see which accounts can be consolidated, such as saving accounts, then close any that are unused or have poor benefits. This also applies to any current accounts you have open but no longer use.

Be mindful when cancelling credit cards as this can alter your credit utilisation ratio which in turn affects your credit score. If any of your cards have a small credit limit or a monthly fee then these are worth closing, any others are better to be left open and set aside for emergencies. Or, if you have a relatively thin credit file, to help you build your credit score.

Tidy up your paperwork

If your home filing system consists of stuffing all your bank and card statements into a kitchen drawer or a box hidden in the wardrobe then it’s time to get organised.

Collect up all of your paperwork from around the house and find a space to work. Begin by categorising each statement eg. Fuel bills, bank statements, council tax letters, etc. It’s recommended to keep any paperwork less than 2 years old and anything else can be shredded (to prevent fraud).

Top tip – many companies now offer paperless billing and online accounts which is a great way to keep track of all your finances without the hassle of paper.

Change banks and get free money

Many high street banks offer new customers a small cash reward for swapping their current account so if you don’t have any special benefits or conditions, it might be worth making that switch.

They will ensure all your direct debits and salary will be transferred meaning you don’t have to do anything at all.

Set a budget and stick to it

Creating a budget is a great way to know exactly how much your monthly expenses will be and prevent any nasty surprises.

Make sure to plan for all your regular bills, food shopping, travel expenses, etc. by using a spreadsheet to keep track of all outgoings.

It can be easy to go over your budget when you eat out for lunch every day, pick up a coffee every morning or pop to the shops every night to pick up dinner.

Pay yourself every month

Having some form of accessible savings is a valuable asset in case of emergencies so after setting your budget (see above), set up an automated monthly payment to go into a separate account.

Set up a standing order via online banking so you don’t even have to go into a branch or pick up your phone to do this.

It only takes 5 minutes to set up and you’ll be surprised how quickly your pot will start to grow. Soon enough, you won’t even notice the money leaving your main account.

Create a debt snowball

If you’re struggling to clear your debt in a timely manner then the best way to tackle it, is to create the ‘snowball effect’.

To start this process, you need to prioritise your debt by the highest APR and work out the maximum you can afford to pay each month on that one account while only paying the minimum on the others. This way you will be able to clear your debt much faster and cheaper.

This is also a great time to see if you can consolidate your debt with a low-cost personal loan. This way you will be paying more towards your outstanding balance and less on interest.

If you want to some more money-saving tips, check out our 29 ways to save

Hitachi Hints and Tips is intended to be informative and interesting. It does not constitute financial advice, and you should always do further research when making any financial decisions. All information was correct at date of publication.
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