Spring is traditionally a time for sprucing up our homes and gardens, but it’s also an excellent opportunity to tidy up our finances.
If you’re someone who regularly keeps track of your finances, you might already conduct a financial health check. However, if you find yourself barely making ends meet each month, you may not have the time or inclination to take a step back and evaluate your financial situation.
Nevertheless, it’s worth the effort. Even if the task seems daunting, focus on the relief and peace of mind you’ll experience afterward, knowing that your money is being managed efficiently.
Let’s explore some ways to spring clean your finances and, hopefully, save some money in the process.
Assess Your Debts
After the Christmas, many people find themselves struggling with debt. Spring is often when we’re still trying to pay off festive expenses or additional costs like summer holiday expenses.
Start by creating a budget to understand how much money you can allocate to paying off your debts. If your expenses exceed your income, look for ways to reduce your spending. Consider keeping a spending diary to identify any costly habits.
Create a Debt Repayment Plan
Once you understand your debt situation, prioritise paying off the debt with the highest interest rate first. By focusing on the high-interest debt, you can save money on interest payments in the long run.
Explore Income-Boosting Opportunities
If you’re struggling to make ends meet, consider ways to increase your income. You could sell unwanted items, take on a side job, or rent out a spare room in your home.
Under the government’s rent-a-room scheme, you can earn up to £7,500 tax-free by renting out a room in your home.
Reduce Your Expenses
If increasing your income isn’t an option, look for ways to reduce your expenses. Cancel any unused subscriptions and create a weekly meal plan to cut down on food expenses.
Make sure you’re getting the best deal on your mortgage, as it’s likely your most significant monthly expense. Don’t assume you’re too old to remortgage; many lenders offer mortgages to people in their 50s, 60s, and beyond.
Consider Overpaying Your Mortgage
If you have extra money, consider overpaying your mortgage. However, make sure you won’t incur any penalties for doing so, and check with your lender for any overpayment limits.
Review Your Insurance Policies
Review your insurance policies to ensure they still meet your needs and offer value for money. You may find a policy with similar coverage at a lower cost, or one with additional benefits you don’t currently have but would like.
Major life changes like marriage or divorce may also necessitate a review of your insurance coverage to ensure it still suits your needs.