Nicola Deverson is the founder of Financially Fit Women. Here’s her advice for spring cleaning your ﬁnances…
Spring is a time when we feel the urge to get moving, declutter and deal with the jobs that we have been putting off . It is therefore an ideal time to take a look at your finances.
WHERE TO START
Gather together the last three months of bank statements and credit card bills. If you really want to get to grips with how much you are spending and where it’s going, then you should analyse them in detail, but this is a task that would prevent many people from even starting. If this applies to you then use the highlighter method.
Take three highlighters in diff erent colours and highlight all of the essential items such as your mortgage, insurance, utility bills, food etc. Then take a second colour and highlight all of the items that you bought because you really wanted them and had thought about the purchase in advance. Finally highlight the items that you just spent money on without any real consideration beforehand. It is these last items that often surprise us and where we can cut back if we need to do so.
Take a look at the direct debits and standing orders that you are paying. Are there any that are no longer required and could be cancelled? Are you paying for a magazine subscription that you no longer read or an annual pass for somewhere you no longer visit?
TACKLE CREDIT CARD DEBT
Are you paying off your credit card balances in full each month or is there some debt still hanging around from Christmas or last year’s holiday?
If you have more than one unpaid credit card balance summarise the amounts outstanding and the interest rate applying to it. Consider whether you can transfer any of the balances to a card with a lower interest rate or better still 0%. There will be a transfer fee but you are likely to pay less interest overall if the debt is not going to be cleared in a few months.
Identify how much you can pay in total each month and set up direct debits so that payments are made automatically. Pay the minimum balance on the debts with the lowest interest rates and the maximum that you can afford against the balance with the higher rate. This way you will pay less interest overall.
Identify when your insurance premiums are due for renewal and put the dates in your diary. Then enter another date three weeks before that to obtain alternative quotes. Insurance companies rely on our tardiness and we can end up paying more than we need to by remaining with the same provider.
When was the last time you changed your gas, electricity or phone provider? If you haven’t done so in the last five years you are probably missing out on some good deals. Long term customers are rarely rewarded for their loyalty and better deals are often available to new customers. Dig out your utility bills and see what tariff you are on before visiting a comparison website.
BANK ACCOUNTS AND MORTGAGES
Review the rates of interest that you are receiving on your bank accounts, if any. If you were enticed to open an account because it paid a higher rate is it still doing so, or has that period come to an end? Interest rates continue to be really low but it is still worth taking a look around. Speak to a mortgage adviser to see if you can get a better deal.
If you have filing cupboards stuffed full of old bank statements, insurance renewals, credit cards etc, consider shredding the old ones and scanning the ones you need to keep. There are a few documents we need to keep in paper form such as birth certificates but the majority can be held digitally. Just make sure that your files are safely backed up.