Spring Clean Your Finances

Spring is the perfect time to tidy up your home and your money

Here are 10 ways to ease some stress, and spring clean your finances.

Around this time of year, it is time to start thinking about a spring clean. With everything planning is essential so most people have a to-do list for each room of the home. It all gets done little by little rather than in a single weekend. Whether you prefer to spring clean a bit at a time or all at once, don’t forget to add one thing to your list: your finances.

Now is a great time of year to check in on those financial New Year’s resolutions and to tidy up your financial life. By doing a spring clean can also help with the additional costs that 2022 has bought everyone, including increases to the cost of living, fuel, national Insurance and energy.

Not sure where to begin when making your money spring cleaning list? Check out these ideas for a start:

1. Get Rid Of Old Accounts

Over the years, it’s easy for accounts of all sorts to accumulate. Maybe you tried a new bank a while back, but didn’t prefer their service and switched back. You may even have credit cards you aren’t using at the moment.

Now is an excellent time to clean up all those old accounts. Try to figure out where you have accounts, and consolidate as much as possible. Or you may need to actually close old bank accounts or credit cards.

Be careful when closing credit card accounts, though, as this will change your debt-to-credit ratio and could lower your credit score. But if the card in question has a relatively small limit or charges an annual fee, it may be worthwhile to close it. 

2. Clean Up Your Paperwork

While you’re going through those old bank accounts, start cleaning up your paperwork, too. Reducing the number of accounts you have can reduce the amount of mail you get. You should also go through your old paperwork annually to see what you can get rid of.

Generally, you want to keep tax-related paperwork for six years, or maybe more if you’re a business owner. But if you’re still hanging on to personal tax paperwork that’s more than a decade old, it’s time to take it to the shredder. As you get rid of paperwork, ensure that your filing system makes sense that you keep the paperwork you need and don’t let things fall through the cracks.

3. Change Banks

Are you getting the best possible interest rate on your savings and maybe even current account at your bank? If not, or if you’re paying high banking fees, it may be time to find a new bank.

With interest rates so low it is worth shopping around through switch services. You may even out-earn inflation in some high-yield savings accounts.

The key here is to be sure you can live up to the bank’s expectations to get the best yields. So be realistic about your daily and annual balances to ensure you aren’t choosing a bank where you’ll inadvertently have to pay fees because your balance isn’t high enough.

4. Attack The Debt

Getting out of debt is always a worthwhile goal.

One option, the traditional “snowball” method, is to pay off your debts smallest balance to largest balance. Each time you pay off a debt, you roll that debt’s minimum payments into your monthly snowball payment. By the time you get to your highest-balance debt, you’re throwing a ton of money at it each month.

Another option is to structure your debts from highest interest rate to lowest interest rate. This is also a great option, and it can help you save more money as you get out of debt.

5. Set And Track A Budget

If you aren’t already tracking your budget, it’s time to start now. Keeping track of your budget is the best way to begin working towards your financial goals. And it does not have to do anything super complicated.

Plenty of online budget tools let you set up a simple budget and automatically keep track of your spending in different categories. The great thing is that you just focus on tracking your trouble spending areas–those types of things you tend to overspend on. Just becoming more aware of your monthly spending can help you rein it in so that you can direct more money towards paying off that debt.

6. Automate Your Savings

Once you’ve figured out your budget and how much you want to put towards debt each month, look at how much you want to save. Whether you’re saving for long-term goals like retirement or short-term goals like a holiday, automating your savings is an excellent way to make it happen.

7. Insurance For The Car, House, Life And Other

You might think that insurance premium costs remain the same, but that’s actually not the case. In fact, many insurance premiums fluctuate depending on how well the financial market is doing. Everyone is aware to shop around for car and home insurance every year. Helping to reward people with no claim bonuses. When was the last time you reviewed your life insurance? 5 years? 10 years? Longer?

It is always worthwhile reviewing life insurance every 3 years to improve cost and cover.

8. Begin Investing

Once you’ve worked out a budget and matched all your insurance needs. It’s time to start investing if you haven’t already. You’re really never too young to begin investing, and if you’re out of your twenties, you can’t get going soon enough.

It is always worth discussing investments with professionals. Start with your bank, as they have in house teams. Also please ensure that you research thoroughly and only invest what is affordable.

9. Keep Track Of Your Assets

Tracking your net worth might seem like it’s not worth your time, but it’s actually something worth looking at. Your net worth is the value of all your assets, including non-liquid assets like your home or car, minus all of your debts. Sometimes the path towards becoming debt free can be long and arduous. But as you climb that path, your net worth will climb, too. So that can be encouraging.

10. Create Or Update Your Estate Plan

Spring cleaning is about preparing for the future. Financial spring cleaning is no different. Much of it is about planning for the future, both of yourself and of the ones you love.

Unless you’re a wealthy individual, you probably don’t need a complicated estate plan. But nearly everyone needs a will and a streamlined estate plan. For instance, if you have debts, you need to be sure those can be covered so that your loved ones aren’t stuck with a mountain of problems. If you have children, an estate plan and will is even more important. So if you don’t have one of these or you haven’t looked at it in more than a couple of years, it’s time to get an estate plan together.

These spring cleaning steps could happen in the course of a week or two with some dedicated effort and the right tools. Or you can begin your spring cleaning now and plan to finish in a couple of months, just in time to relax for the summer.