Spring clean your finances

Spring clean your finances

We’re all for setting realistic, achievable goals so here’s a simple springtime challenge for you.

Pick one of these 10 suggestions and decide to do it. If it helps find a friend or partner, pick a task you both need to do and do it together. Sit down one evening, open a bottle of Rioja and browse price comparison websites together. Or take turns to help sort each other’s paper mountains over a packet of chocolate biscuits.

Do whatever you need to do to make the tasks more palatable and then decide on one action - one small sweet step at a time. Never underestimate the power of doing what you say you’ll do…we guarantee it will put a spring in your step. So, are you ready ...?

1) Get your paperwork in order

You can’t beat the feelgood factor of having your paperwork in order. Piles of paper can make overwhelming mountains out of administrative molehills. Sorting it out is often just a question of getting a good system in place – it’s the dithering and agonising over where to put something that often makes us put off the whole task. So think what small steps could help make filing a doddle of a daily habit. One idea is to create clearly labelled, separate files in transparent wallets for each account and keep them somewhere safe and accessible. All this is especially important if you have your own business. This is the time to organise receipts and gather your paperwork for the end of the tax year. If you get your return done now you’ll have plenty of time to plan for the next big tax bill (in January 2013) and you may save on accounting fees – some accountants charge less if you get your returns in early.

2) Start saving

If you’re not already a regular saver it’s time to get the saving habit. Set up a system, whether it’s £50 a month transferred to a savings account, or even a tenner in a tin! The important thing is to save by default rather than waiting until you feel you have enough to save, as that feeling may never happen.

3) Check your interest

It’s in your interest to keep up to speed with interest rates on savings accounts or cash ISAs. The new tax year (6 April 2012 to 5 April 2013) has brought a fresh allowance for cash ISAs – you can now save up to £5,640 per person tax free. If you’ve got old savings accounts that pay low rates it’s well worth transferring your money to an account that gives you more. Many accounts lure you in with an introductory bonus rates that only last for 12 months, so don’t fall into the trap of sitting tight on old accounts.

4) Deal with debts

If you have any debts, now’s a great time to sit down and work out a payment plan to clear them. Make a list of everyone you owe money to, how much you owe, the minimum payments you’re currently making to each and the rate of interest you’re being charged. With that information ready, Most people who take out a loan to repay their debt end up accumulating further debt within the year. So we’re all for snowballing it. We show you on the video above some great tools to help you work out a plan to become debt-free.

5) Review your mortgage

It’s time to review your options – maybe arranging an appointment with a mortgage broker to assess whether your current mortgage arrangements are still right for you. For example if you’re on a standard variable rate deal, would now be a good time to switch to a fixed or tracker rate mortgage? Or if your mortgage is interest only, could you now switch to repayment? If you’re struggling to afford to meet the extra repayments, find out if your mortgage lender will allow you to overpay the loan without penalty, so that way you could at least build up funds towards the cost of the mortgage itself and not just the interest. This can be a good half way house if you don’t feel able to make the monthly commitment of a repayment mortgage. The important thing is to do something towards eventually repaying your mortgage, even if that is building up savings or arranging an investment that could build to a lump sum to repay the loan.

6) Review your net worth

Your net worth is like a financial report card, enabling you to take stock of the complete picture of your finances rather than just seeing one aspect. It gives you a figure that is the total value of your property, pensions, savings and investments, minus any mortgages, loans, credit cards or other debt – and you can calculate it using our ‘What’s your Net Worth’ worksheet, which you can download from the downloads page on our Sheconomics site. This figure gives a valuable perspective to check in with yourself, comparing where you stand from one year to the next and to make, and keep track of, your financial goals.

7) Review your energy and phone supplies

They’re banking on the fact that few of us do this. We’re often put off by thinking it’s going to be a daunting, time-consuming and complex task, but there are plenty of websites and online tools that make comparisons easy. Sometimes it’s just about negotiating the best tariffs with your current suppliers. Compare deals for utility bills by visiting www.uswitch.com.

Compare the latest mobile phone bills via moneysupermarket.com/mobile-phones and ensure you understand your phone tariff so you’ll be less likely to go over your allowance. Take a look at Martin Lewis’ website to review whether you’re on the best home phone package.

8) Check your credit rating

It’s good to do this once a year so that you know for sure that everything is ok on your record. Don’t wait until you have to borrow money as you may then not have time to address any mistakes or problems. It is possible to check this without being charged through a 30 day free trial with an online credit reference agency such as Experian (Credit Check), but be sure to read the small print and beware of the trap - it’s easy to sign up for the free trial and then forget to cancel it within the 30 days (and they don’t make it easy, it’s not a direct debit and you have to phone or email to cancel it).

If you think you’re unlikely to cancel, it could make more sense just to do things the old fashioned way and complete a form and send it off by post with a cheque for £2.

9) Gem up on the 2012 Budget

Are you up to speed with the 2012 Budget and how the changes may affect you in terms of tax credits, child benefits, personal allowances and more? Savvywoman’s Sarah Pennells has a good summary of the key points and information on the Budget changes to benefits, especially to working and child tax credits. We’d also suggest using this online calculator from the Guardian to assess the implications for you. You may need to review your personal spending and household budget in the light of any changes.

10) Find time for your finances

Last but most definitely not least, schedule some time each week or each month to devote to your financial housekeeping. Just like the physical housework, it’s the compound effect of small, regular efforts that can make a massive difference. With money, achieving your goals is normally not about how much you earn but how you control your cash and this regular attention could mean the difference between a comfortable retirement or trying to live on a State pension. So give it a regular slot in your diary, to check your bank balances, review, diarise, prioritise, and decide when you’ll do the rest of these spring cleaning tips…!

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