Spring clean your financial arrangements

Not only is the new tax year soon to be upon us, but there are definite signs of Spring in the air.

It is a combination that suggests it is time for a financial spring clean. We look at the steps you can take to stop wasting wealth and start growing it.

Step 1: See where it is all going

You can’t spring clean your finances if you can’t see them properly. You need to know exactly what is coming in and just what is going out. So, get your last three months bank statements. If your bank has stopped sending them you may need to get them printed off.

The statements should show everything you are spending. There may be some unpleasant surprises – little (and not so little) expenses that add up to a lot, and subscriptions and Direct Debits you had forgotten about.

There will be the household bills, gas, electricity, broadband, TV services. Your mobile – and your insurance.

Have you got any debts? Dig out those credit card statements. How much do you really owe – and how much is it costing you in interest each month?

Step 2: Start paying less

The priority is to cancel all those subscriptions for services like gym membership that you never use. Check your mobile bill – you can find that what you thought was a one-off call was a subscription.

Then start looking at the services you do use. You can’t cancel your utilities, but you can probably go on a comparison site to find a cheaper supplier.

Look at your insurance too. You can’t just replace an existing policy, but you can find alternative insurers who charge you less when renewal time comes around.

 Step 3: Deal with debts

With the easy holes in your finances plugged, you can start looking at the real money wasters. Credit card debt is very easy to get into – just tap the card at the checkout and you are on your way. But it can be really difficult to get out of. The interest rates are high, and every month edges your debt up a little more.

The solution is to find a card with a 0% balance transfer deal and transfer your balance to it. Aim to pay off as much as you can each month (it should be easier if you have dealt with all the money wasters you identified in step 2) and don’t use the card for anything else. Use a debit card instead – the money comes from your current account, not from debt.

Getting out of expensive credit card debt is vital. There’s little point trying to start saving at 3% interest when you are paying 26% on your credit card debt.

Step 4: Stay in control

With outgoings shrunk and a plan for getting out of debt, you need to stay in control. Use a spreadsheet if you are familiar with office software, a money app if you are smartphone user – or a notebook if you are a traditionalist– but however you tackle it, noting your outgoings cuts the risk of unnecessary spending.

You might need to set yourself and your family a budget. You could object that this takes the fun out of life – but being stuck in debt is no fun either.

Give yourself a small surplus each month, to deal with emergencies.

Step 5: Start saving

With your money managed, that monthly surplus can start working for you. Once you have a small cash sum built up, you can start growing it with a savings account.

A look at our online comparison tool will help you find the best home for your cash savings – or if you prefer, give us a call and get some expert advice on the next steps in making the most of your money.

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.

The Financial Conduct Authority does not regulate deposit accounts.