The clocks have sprung forward, temperatures are inching higher, and the UK’s flora and fauna are flourishing. Yes, spring is a season full of promise for better things to come. So, what better time to assess your finances and carry out some essential spring cleaning? In this blog, Acumen gives you our 10 essential personal finance tips.
Everything just seems better in spring doesn’t it? The birds are chirpier. The country is beginning to bloom. The sun begins to stir from its winter hibernation. Generally speaking, it’s a time for positivity and optimism. Maybe it’s the Vitamin D! Whatever it is, we believe that this is the perfect time to clean up your finances and put new strategies into action.
Here are our 10 tips for how to organise your finances in 2018:
1. Work out your income
First things first. It’s important to work out your total income. That includes all your incomings, including your salary and any bonuses, interest on cash accounts, and any other income from property rentals or dividends on shares. Remember to deduct tax, National Insurance and Student Loan repayments for a true picture of financial health.
2. Separate regular and irregular income
In order to give yourself a true forecast of your income patterns, we recommend separating your annual/irregular income from your regular monthly earnings. This will give you a complete overview of your monthly incomings and your more infrequent windfalls.
3. Assess your regular outgoings
Now that you have a fuller picture of your income, you’ll want to take this opportunity to assess your regular outgoings. In order to do this, you’ll want to have the last 6-12 months of bank statements to hand. Start by charting your regular expenditure on everything from utility bills to your weekly food bill. You can also include your pension contributions, regular savings and life assurance contributions.
4. Review your bank statements
It’s good practice to regularly check your bank statements for any unexplained or unwanted standing orders and direct debits. It goes without saying that your increasingly underused gym membership (us too, no judgement here!) or that infrequently used Amazon Prime account are exactly the sort of unnecessary expenditure that are crying out for a cull. You can usually do this with just a few clicks of a button online.
5. Check your credit history
For absolute peace of mind, it’s a good idea to get a copy of your full credit history. You can do this easily enough by contacting a Credit Reference agency, such as Experian, to ensure that there are no outstanding loans that may have escaped your attention or incorrect entries that could be harming your credit history.
6. Get brutal with your spending habits
Now it’s time to delve deeper into your spending habits. No stone should be left unturned, from one-off expenses like wedding presents and that perfect new coffee table, to yearly expenses like car insurance, birthdays and anniversaries, monthly expenditure like your broadband subscription, and irregular expenditure like meals out and ATM withdrawals (yes, they count too!).
7. Draw up a budget
Okay, so you’ve totalled up your income and regular spending. You’ll now be left with an annual total, which you can divide by 12. Then add up your regular monthly bills and expenditure to give you a general idea of how much you need to budget each month to allow for those little extras, like an impromptu shopping spree or a surprise meal with your other half.
8. Compare and contrast
If you compare your income with your bank statement spending figures, you can assess your yearly and monthly surpluses and shortfalls. This will help you to draw up a sensible budget going forward. This is a really effective means of helping you to forecast your monthly expenditure and plan for any extras that might have previously derailed your saving efforts.
9. Be honest with yourself
You may or may not be surprised to find that your spending patterns are overstretching your finances. The sooner you can identify this, the sooner you can identify where savings can be made and take appropriate action. Often, this won’t necessarily impact your quality of life. Rather, with some strategic tweaks here and there, you can continue to live the life you’ve become accustomed to.
10. Shop around
We are, after all, creatures of habit. Many of us will stick with the same utility, broadband and mobile providers for years for the sake of a quiet life. However, could you be getting a better deal elsewhere? It’s worth checking the tariffs for your gas, water, electricity, phone and broadband to see if a better deal is out there for you. You can use websites like uSwitch or moneysavingexpert.com to guide your research.
Whatever your financial goals, it’s a great idea to draw up a plan that will help you achieve them. Remember to be realistic and include non-negotiable spending items. Some expenses are unavoidable. Others are difficult – but not impossible – to get rid of, while some are no-brainers that you could change today. Even the smallest changes can mean big results.
If you’d like to spring clean your finances, why not speak to one of our expert financial advisers to discuss your financial goals. Please call Acumen today on 0151 520 4353 or email us at [email protected].