It’s that time of year when many of us give our homes a spring clean, but have you ever considered applying this to your finances? If you want to manage your money efficiently, then carry out a financial review. We’ve shared a simple checklist to help you spring-clean your finances.
Springtime is a good time of year to reassess your financial planning and to make sure you’re on track when it comes to your goals. You might have a big life event on the horizon that you need to save up for. Maybe you’re nearing retirement, and you’re becoming more conscious of spend. Or perhaps you need to control your spending due to rising costs…
Whatever financial situation you’re in, it’s important to feel in control of your money. It’s also worth checking that you’re taking advantage of any available tax relief. A little planning goes a long way when it comes to making the most of your savings. And with the right approach to your financial planning, you might not have to work for as many years as you’d expect.
“Do not save what is left after spending; instead, spend what is left after saving.”
Warren Buffett
Financial spring-cleaning checklist
Below are some of the key areas you should consider when spring-cleaning your finances:
- Revisit your financial goals – have your goals changed this year? If you need more money to achieve a particular aim, then you’ll need to check your spending and your savings strategy.
- Assess your current spending – have your outgoings or credit card bills recently increased? It’s worth keeping an eye on your spending if you want to stay in control of your finances. Look through your bank statements to see where your money is going and if there are any ways to cut back. Cancel any forgotten subscriptions or memberships. Create a monthly budget and set a spending limit to manage finances.
- Pay off high-interest debts – if you have multiple credit cards, then it can be easy to forget when interest-free periods come to an end. High-interest fees can quickly spiral into large debts, exacerbating your existing credit card debt. Aim to pay off the credit cards with high-interest debts first to avoid paying unnecessary interest fees. You could look at debt consolidation to reduce interest fees but always seek advice.
- Check your savings accounts – do you have money saved in a high-street bank account earning very little interest? Consider moving some money into a higher fixed-rate savings account or a tax-free ISA. Depending on your goals and age, there will be different savings strategies. For example, if you’re under 40 and looking to buy your first home, you could open a Lifetime ISA. This would enable you to save up to £4,000 a year until you’re 50 plus an extra 25% government savings bonus.
- Review your investment portfolios – are you getting attractive returns from your current investment strategy or paying high fees? Stock market prices rise and fall, so we always recommend a long-term plan to investing. A well-diversified portfolio will also help to protect your investments from market shocks and volatility. For an ethical approach, there are responsible investing portfolios you can choose from.
- Optimise your pension contributions – are your current pension contributions enough for you to achieve your desired level of retirement? Take advantage of available tax relief by contributing more to private or workplace pensions. If you’re a higher-rate taxpayer, you can claim significant relief on your pension contributions. Check your pension forecast to gain a clear understanding of your retirement income.
- Check your insurance policies – do you have adequate coverage for worst-case scenarios, such as being too ill to work? A critical illness policy could provide you with an income if you were diagnosed with a serious illness. Although nobody likes to think about it, have you considered what would happen if you or your partner died? Life insurance can provide your surviving family with much-needed financial security.
Financial Planning, Nottingham and Lincoln
Just like you spring clean your home each year, you should also give your finances a spring clean. By carrying out a financial review, you can make sure you’re not missing out on any tax-efficient strategies to make the most of your hard-earned wealth.
Our financial planners can carry out a financial review on your behalf, giving you a clearer picture of your financial situation. Using sophisticated cash-flow planning software, you’ll be able to see both your current and future financial position. We’ll show you the expected money coming in and going out throughout your lifetime, allowing for different eventualities. You’ll then have more peace of mind when it comes to making big financial decisions.
Our team can advise on suitable savings, pensions and investment strategies that align to your aims and your preferred level of risk. We’ll also help you to protect your money so it’s more resilient to economic volatility and major life challenges.
If you need a financial spring clean, then why not book a financial review with one of our team? Get in touch to speak to our financial planners.
Sources:
https://www.standardlife.co.uk/articles/article-page/spring-clean
https://www.deliberatedirections.com/quotes-financial-wellness/
https://www.gov.uk/lifetime-isa
