Give your finances a spring clean...
ROLL UP YOUR SLEEVES TO TARGET GROWING BILLS AND MESSY SPENDING, SAYS HARVEY JONES
HAVING a financial spring clean is always a good idea at this time of year, but in 2022 it’s more important than ever with the cost-of-living crisis raging.
As energy and food costs skyrocket, and with income tax, National Insurance and council tax bills set to rise this month, many of us have to make the most of every penny.
So it’s the ideal time to take stock, clean up and prepare yourself for a tough year ahead.
The following tips may help.
SORT THE ESSENTIALS FIRST
Make sure you are covering the basics in life before moving on to the treats, says Gail Goldie, director of savings and lending at Tesco Bank.
“Work out what you spend each month, and what you earn. Get it all down on paper, a spreadsheet or online planner. That way nothing gets forgotten,” she adds.
List your essential spending, such as mortgage or rent, council tax, energy and water bills, phone, insurance, broadband, food shops, petrol, childcare and debt repayments. Add them together to see how much income you have left for having a little bit of fun, and plan for that, too.
“Consider putting pots of money aside in bank accounts for different parts of your budget,” Gail says.
BUILD A CASH SAFETY NET
Everyone should have enough money set aside to cover three to six months of living expenses, Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, says.
“That isn’t easy these days, but try to build a cash cushion if you can.”
TAKE CHARGE OF BILLS
It’s easy to set bills aside to worry about later, but doing this can prove to be costly, says Hayley Millhouse at low-cost financial advice provider OpenMoney.
“You could end up paying fines and penalty charges, and damaging your credit score, too, if you lose track of them.
“This will make borrowing money harder in future.”
TIDY UP ALL BANK ACCOUNTS
With busy lives, there is a danger of losing track of bank and savings accounts, and all your direct debits and payments.
Although banks and building societies have been slow to hike savings rates, they are beginning to improve, so shop around and get more for your money.
RUN THROUGH YOUR BORROWINGS
Check what you owe, who you owe it to, and how much interest you pay. You could save money by consolidating credit card debt on to a balance transfer card charging 0% for an introductory period, or by taking out a personal loan.
STOP PAYING FOR UNUSED SUBSCRIPTIONS
Companies love selling us subscriptions because it gives them a regular stream of income. “Many of us continue shelling out long after we stop using their services. We forget, they profit,” Hayley says.
Another bad habit is forgetting to cancel free trials, so set a reminder on your phone to prompt you before the end, or write it on your calendar. “Some free trials let you cancel at any time in the free period, while still keeping the service for the allotted amount of time. “In this case, cancel on the day you sign up to avoid costly memory slips.”
CURE BAD MONEY HABITS
All of us develop bad money habits but some are more costly than others, such as gambling.
“Placing the odd bet may seem fun and harmless but just remember you will rarely win,” Hayley says.
If you do bet, stick to small amounts and ensure essential payments are covered first.
“Never bet money you can’t afford to lose and if you worry it may be getting out of control, contact a gambling charity,” Hayley suggests.
SWITCH SUPPLIERS
Sadly, switching to a cheaper energy provider isn’t as easy as it once was. But that doesn’t stop you from moving motor and home insurer, broadband supplier, mobile operator or mortgage lender.
Call all your providers and haggle, suggests Michael Foote, editor-inchief of comparison site quotegoat. com.
“Research the best deals online and dial your utility, telephone, bank or insurers,” he says.
“Explain you’ve seen a better deal online. If they can’t match it exactly, don’t be afraid to haggle on either price or length of the contract.”
HAVE A CLEAR OUT
Many people splurged on gym clothes and dumbbells during lockdowns but a third hardly use their at-home gear, Gumtree research found.
Selling them will make a bit of cash, tidy up your home and mean unwanted items will actually be used elsewhere.
Tidy up your tech, too, Hayley says. An iPhone 8 in good working condition can still collect up to £100 on popular sites such as MusicMagpie. Even a Samsung Galaxy S8 can sell for £50, despite being quite a few years old.
PLAN MEALS FOR THE WEEK
This can reduce food spend and waste significantly – and save stress.
Freeze meat, precooked meals and multibuys so they don’t go off.
You could even order food and toiletries in bulk and split the cost with friends and family for further savings.
Placing the odd bet may seem fun and harmless but just remember you will rarely win
TRACK DOWN YOUR LOST PENSIONS
You could end up with eight or nine different pensions over a working lifetime, and you don’t want to lose track of any of them, says Tom Selby, head of retirement policy at AJ Bell.
“The average millennial is likely to have changed employer five times, less than halfway through their career.
“As part of your spring clean, it’s worth digging out your old pension packs and seeing if it would be worth consolidating them into one.
“This makes them easier to manage and could save fees,” he says.
If you’re having trouble tracking pensions down, contact the Government’s free pension tracing service on gov.uk/find-lost-pension, or call 0345 6002 537.
Hayley Millhouse from OpenMoney