Give your finances a spring clean-up
HARVEY JONES
YOUR home may need a good spring clean after a long and difficult winter, but your finances probably need it more.
Cutting spending, paying down debts and building savings for the future should set you in good stead for the year ahead.
Now is the time to blow the dust off your bank statements and work out where all the money is going.
Pauline van Brakel, chief product officer at money app Yolt, says: “Take a look at your essential outgoings, such as rent or mortgage, council tax, insurance, energy bills and groceries, to find out how much you need to get by each month.
“Subtract that from your income, to see where you stand and make sure you are living within your means.”
Our two biggest financial regrets are failing to save for a rainy day sooner and waiting too long to start a pension, according to Hargreaves Lansdown. Personal finance analyst Sarah Coles advises: “First, build a pot of cash with easy access, ideally six months of salary to see you through emergencies.”
Then look long-term by saving in tax-efficient pensions and Isas.
“Do the right thing automatically by making regular savings and investments,” says Sarah.
If you’ve run up credit card debt, consider switching it to a zerointerest balance transfer card.
Borrowers can save £676 a year in interest by transferring the average £2,177 debt, according to online credit score experts TotallyMoney.
Chief Alastair Douglas says: “Introductory ‘honeymoon’ rates are getting shorter but there are still some good deals.” Sainsbury’s has an interest-free balance transfer card with an introductory rate lasting 29 months, subject to status – but with a 3% or 4% transfer fee. It has a card with no fee but a shorter intro period of 18 months. Clear the balance before the full APR kicks in, or you could be paying 21.95%.
If your debts are piling up, get free help from Citizens Advice or debt charity StepChange.
The average car insurance premium fell by £100 to a six-year low of £627 in January, according to Comparethemarket.com.
Motor insurance head Dan Hutson says car owners will only benefit if they shop around rather than renewing their existing policy.
Switching saves up to £250 but Dan says don’t leave it to the last minute. “Plan a month beforehand to find the best value deal.”
Check a policy has everything you need before signing up, too.
Energy bills will increase as the price cap jumps by £96 on April 1. The average customer on a standard variable tariff will then pay £1,138 a year for gas and electricity.
Uswitch.com energy expert Sarah Broomfield says British Gas, EDF, E.ON, Scottish Power and Npower are all hiking bills to the cap – but the market-leading fixed deal from Avro Energy is just £945.
“By shopping around for a better deal, you could save £193.”
Happy with your bank? If not, may be time to start afresh.
First Direct is offering a £100 “welcome” to new customers who switch to its 1st Account, while Virgin Money is giving away 12 bottles of wine worth £138. To qualify for these deals, you must be a new customer, switch all your banking through the Current Account Switch Service, set up two direct debits and pay in at least £1,000.
it
Tens of billions are sitting in forgotten bank accounts, investment funds and pension policies.
Even if you lost track of money years ago, it still belongs to you.
Trace mislaid bank and building society accounts free of charge at Mylostaccount.org.uk, while the Pensions Tracing Service can help you find lost personal and company plans.
BREAKING NEWS AT
It’s not just your house that could do with a good tidy
The Unclaimed Assets Register will help for a fixed £25 fee.
Sweep up old loyalty cards, cashback deals, gift cards and reward points, and put them to work.
Failing to spend them is throwing money away. You could also have a clear-out and sell stuff at a car boot sale when restrictions ease, or via sites like MoneyMagpie.com.
If you have a mortgage, it may be one of your biggest monthly costs, and offer some of the largest potential savings.
One in four pays over the odds on their lender’s standard variable rate (SVR), broker Habito says.
SVR deals at the top six lenders cost on average 3.53%, yet new customers can get two-year fixed rates starting at 1.26%. Somebody with a £150,000 mortgage could save up to £4,080 per year by switching.
Three in five adults haven’t written a will, which means their assets could go to the wrong people.
Neil Jones, tax and estate planning specialist at Canada Life, says this is even more important following marriage or divorce, new children or grandchildren, or the death of a beneficiary.
Reward yourself for cleaning up your finances by planning a treat for when lockdown is over. Whether that’s a weekend away, a party or a holiday in the sun, you’ve earned it.