Drop the vacuum! Put the duster down! The house can wait. Sorting out your finances will be more beneficial to you in the long run than decluttering your kitchen cupboards.
If you’re not sure where to start, this checklist is for you. After crossing off each task, you’ll be one step closer to even better financial health.
Getting organised is a great first place to start when it comes to sorting your finances. That means tracking down all your important financial documents and housing them somewhere safe.
Nowadays, most documents are sent over email, but that doesn’t mean you can’t tidy them up. You could create a folder in your inbox dedicated to your financial papers, such as account statements, pension paperwork and payslips. That way you never have to panic-search in the middle of the night for that one document… We’ve all been there.
Is your wallet overflowing with old receipts? Is your purse hiding expired gift cards? Use the excuse of a spring clean to clear out any unwanted items that could be causing a sense of chaos in your daily life. It only takes a minute but it can go a long way to making you feel more in control of your finances.
Complacency can play a big part in unnecessary expenses. We’re not talking about your weekend takeaway or a special trip away. We mean those expenses that are taken out of your account every month through direct debit. Let’s call them leaks in your bank account.
Sit down and take stock of regular, non-essential outgoings. Are you getting your money’s worth of that gym membership? Are you paying insurance for something you no longer have? A direct debit audit could save you money – and you barely have to lift a finger.
💡 Remember to check your contract before cancelling, in case there are hidden cancellation fees.
Your credit rating is used by lenders to determine how capable you could be at fulfilling any repayments. By assessing your rating, you can better understand your position and make any necessary adjustments.
Checking your credit score is easy. You can use websites like Experian or Equifax, which are market leaders in the UK. If your score is on the lower end of the scale, there are things you can do to improve it such as:
Check if you’re registered on vote at your current address
Make sure to pay any debts in a timely manner.
Don’t max out your credit card every month.
It’s crucial to figure out whether you’re getting the best rate for your savings in an account that protects your money.
Some high street banks are offering less than 1% AER. If your money is held in one of these accounts, inflation will be eroding any returns so it could be wise to move your money to a higher interest account.
It’s not all about the number. It’s important to choose an account that works for you, so consider the following questions before moving your money:
Is it easy to withdraw the money?
Is your money protected?
Are there any rules for depositing?
Take some time to review your income to determine whether it’s sufficient for your current situation. If it’s not, it might be that your circumstances and needs have changed since you accepted the job — or perhaps inflation is eating into your income.
We know it can be a difficult subject to broach with your employers, but if you review your income and feel like it isn’t stretching as far as it should, you might want to consider asking for a raise. Alternatively, you could find out when you’re due a salary review so you can appropriately prepare for the process.
We’ll be the first to admit that going through your insurance cover isn’t the most titillating of tasks. But this is a spring clean, so it’s time to get your hands dirty.
Are your insurance policies still up to date? Do they reflect your current situation? Are you getting a fair price?
You could be in for a surprise. Reviewing your policies and consequently switching provider can be a good way to shave off some precious pounds from your outgoings. In fact, a recent study by British firm GoCompare found that drivers in the UK collectively pay an extra £675 million every year in needlessly high premiums by not switching car insurance firms.
💡Remember to check your contracts before switching to avoid any unexpected fees.
Ok, we couldn't think of a pun for this one — but it is a crucial step! At the start of the new tax year, your tax allowances will reset. Currently, you can invest or save £20,000 in an ISA without being taxed on any returns earned from that amount. That means, if you contribute to a Plum Stocks & Shares ISA, any potential capital gains or dividends you receive will be free from tax. So, it can be smart to make a plan now on how you will maximise your ISA allowance going into the new financial year.
However, please bear in mind that your capital is at risk if you choose to invest through a Stocks & Shares ISA and, as with all investments, you may get back less than the amount you invested.
💡Remember, you don’t need to use your allowance on a single ISA. You can split it between different accounts. Read all the ISA rules and limitations here.
If you’ve got to this point in the checklist, it’s time to consider what’s next in your financial journey. With Plum, you can sort out your savings and consider taking the leap into the world of investing, which could help achieve your financial goals in the long-term (capital at risk if you invest).
Please remember that, as with all investing, your capital is at risk. You shouldn’t invest in or deal in any financial product unless you fully understand it and the inherent risks. Plum does not provide investment advice and individual investors should make their own decisions or seek independent advice.
The information contained in this article is for general informational purposes only and is not intended to constitute financial, investment, tax or any other advice or recommendation. The information provided should be used at your own risk and it is your responsibility to evaluate the accuracy, reliability, timeliness and completeness of any information provided herein or available on a linked website.