Posted on: 31-03-2020 in Financial Planning
Spring is now upon us. It’s the time of year when flowers start to blossom, the days are longer, and we do our annual spring clean. The term ‘spring clean’ doesn’t necessarily involve cleaning. It can be used as a metaphor to describe the organisation of anything, including our finances. Whether you are looking to plan for your financial future or work on short-term goals, check out our six tips to freshen up your finances.
Just like doing a deep clean at home, it’s best to get rid of what we no longer need first. From old bank statements to insurance policies we no longer have, most of us are guilty of having too much clutter. Our first tip for spring cleaning your finances is to clear out any paperwork you don’t need. Going paperless can help to reduce clutter. In fact, some companies offer incentives for going paperless. If you prefer hard copies, that’s fine. Just make sure to keep on top of things and shred anything you don’t need. Taping shredded pieces of paper together again isn’t fun. To avoid this, make sure you check everything first and only shred what you don’t need.
You have got rid of the clutter and you are left with the documents you need – but there is a lot of them. Just like planning for your financial future or any long-term goal, it’s essential to be organised. Make life easier for yourself by organising all of your documents now. Your future self will thank you when it comes to finding something in a hurry. How you organise is up to you, but use a filing system for your hard copies and your digital ones. You could separate your documents into categories and file them accordingly. For example, insurance documents in one group, savings and banking paperwork in another, and your mortgage or rental documents in another. Use a filing system to help keep paperwork organised
The latest figures suggest that now could be an excellent time to spring clean your budget. Research carried out by NatWest found that the average adult is wasting £39 a month on unused direct debits. The biggest culprit was unused gym memberships. 12 per cent admitted paying for the gym each month but not using it. Streaming services such as Netflix and Amazon Prime accounted for 10% of unused direct debits. It’s not uncommon for people to sign up for the free month trial and forget to cancel. With this in mind, take a look over your budget and see if you are overspending. Maybe you have some expenses that were not accounted for when you made your budget, or you forgot to add them. Polishing up your budget is a great way to keep on top of your finances and maybe save some money. Any money you save can be reallocated and go towards saving for your financial future. Looking for a fresh way to budget? Why not check out our blog on bullet journals. Bullet journals are a creative way to track your spending and freshen up your finances.
It’s holding you back from securing your financial future, it’s widespread, and it’s easily manageable with the right strategy. We are, of course, talking about debt. The Money Charity found that the average household debt, including mortgages, is a staggering £59,840. Debt can seem daunting, but it doesn’t need to be. What better way to spring clean your finances than tackling debt head-on? There are many debt management techniques, you need to find the right one for you and your circumstances. One that is growing in popularity is the debt snowball method. The debt snowball method is all about momentum. You list all of your debts and start with the smallest one first. Once that is cleared, you can use the extra money to move on to the next. This process is repeated until you are debt-free. Research by Harvard University found this method to be successful. Those who used this debt management method repaid their debt 15% quicker. If you would like to know more, you can check out our blog, which goes more in-depth. Ditch the debt with a debt management strategy
Securing your financial future means different things to different people. Maybe you want to retire early, or perhaps you are working towards another long-term financial milestone. Start by setting yourself realistic short-term and long-term goals. If you have already done this, then reassess your goals and make sure you are on track. When you’re planning for your financial future or any long-term financial goal, make use of the powerful tools you have at your disposal. Compound interest is your best friend when it comes to long-term saving. Albert Einstein actually referred to compound interest as the eighth wonder of the world. Think of compound interest as interest for your interest. Thanks to compound interest, your money will keep growing even if you stop adding to it. If you would like to know more about compound interest, our blog goes into more detail. Start planning for the future now and just like those seeds you plant at the beginning of spring, they will blossom further down the road.
Spring cleaning your finances can be a chore, or maybe you don’t have the time. Speaking with an independent financial adviser can yield excellent results when it comes to reaching your goals. At Holborn, we have over 20 years of experience, helping people achieve their financial goals. Whether it’s securing your financial future, saving for your child’s education, or investing, our experts can help. For more information, contact us using the form below. We’ll be happy to help you spring clean your finances, we’ll leave you to spring clean the house though.