April will mark the start of ballooning bills for some households, with a number of costs, including some utility bills, set to go up – making now the perfect time to spring clean your finances.
Giving your finances a spring clean can be a great way to ensure you’re on top of your budgeting and making the most of any chances to save and spend your money wisely. Here are some suggestions from the experts on how to have a financial spring clear-out.
How to spring clean your finances
While switching providers may be one way to save money on bills, there are other ways to spring clean your finances and help rebalance your budget too. Here are some tips from Rachel Springall, a finance expert at Moneyfacts.co.uk.
Dissect your finances
Get under the bonnet of your household income and outgoings. If you can break down where you’re overspending and look at what you could look to rein in on, it can make a world of difference. Starting a simple spreadsheet and keeping tabs on household bills and upcoming expenses, like holidays and birthdays, can help prevent the risk of being caught short of cash.
Make the most of budgeting apps
Free apps can be useful to establish up-to-date balances on current accounts, credit cards and savings, from many different brands. Customers can assign their outgoings to categories and easily see where most of their cash is going each month. It’s also possible to scan your loyalty cards to use on your phone via an app, so you don’t need to rummage through your wallet.
Cut down on non-essential spending
A recent study from Barclays revealed that millennials spend more than £3,300 a year on average on takeaways, eating out, daily treats such as coffees, socialising and clothes. Saving some of this each year could go towards holidays and even the cost of Christmas.
Make saving automatic
People don’t always have the time to make frequent deposits into their savings accounts – but there are ways to do this automatically. This can be resolved using a simple free app like Chip, which connects to a current account and makes automatic deposits based on a user’s spending.
Lloyds customers can also register for a service called ‘save the change’, which rounds up current account spending to the nearest pound and transfers the difference into a nominated Lloyds savings account.
Move credit card debts
Moving credit card debts to a 0% balance transfer card will help you avoid paying out on unnecessary interest and can help when setting out a plan to get out of debt. Bear in mind fees for transferring the balance, although there are even balance transfer cards around that are fee-free.
Take advantage of re-mortgage deals
Borrowers who are debating whether to refinance would do well to consider some of the latest deals to hit the market, as they could shave hundreds of pounds off their monthly repayments as part of spring cleaning your finances.
Indeed, based on a £200,000 mortgage over a 25-year term on a repayment basis, the monthly repayment on the average two-year fixed rate of 2.49% would cost £896.23 – which is potentially £260.17 cheaper than if they were sitting on their mortgage lender’s standard variable rate (SVR). Borrowers often end up on an SVR when an initial deal comes to an end. Someone on an average 4.89% SVR rate with a £200,000 mortgage could end up paying £1,156.40 per month.
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “The general movement in mortgage rates is upwards, and anyone on their lender’s standard variable rate in particular might want to think about re-mortgaging sooner rather than later. There is no need to panic, but if you would struggle to pay your mortgage were interest rates to rise, then a fixed-rate deal makes sense and there are still some very competitively priced two and five-year fixes. There are longer fixes available but borrowers must not fix for longer than they are absolutely sure about – or you will have to pay an early repayment charge to get out of the mortgage early,” he notes.
Negotiate a pay rise
Laura Holden, spokeswoman for jobs website Reed.co.uk, says: “It’s probably one of the most dreaded conversations you’ll face with your boss, but as the saying goes: ‘If you don’t ask, you don’t get’.”
She suggests booking time to discuss your performance and using online salary checkers and job ads to ensure you’re not asking for too much or too little – and try to approach the conversation with a proactive, positive attitude. Holden suggests highlighting past successes: “They may be obvious to you, but don’t assume that your boss will always be aware of your achievements. Try not to get too disheartened if, in spite of your efforts, a promotion doesn’t come your way,” she adds. “But if you’ve exhausted your options and feel undervalued, it may be time to look for a new role, and changing jobs is a great way to secure a salary rise.”
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Ditch and switch
Switching credit card, current account, energy or insurance providers can create big savings. Kevin Pratt, consumer affairs expert at moneysupermarket.com, says: “If you’ve got a credit card balance that’s costing you interest and you can’t clear it, you can transfer it to a card that will not charge interest for up to three years, giving you chance to reduce what you owe. You’ll usually be charged a fee that’s calculated as a percentage of the amount you’re transferring (around 2% is common), but the interest saved can often outweigh this.”
As for energy providers, he adds: “If you’ve not switched energy provider for a couple of years or more, or have never switched, you’re probably on an expensive variable rate tariff. Switching to a fixed rate deal could save you £250.”
Pack insurance into holiday planning
Malcolm Tarling, a spokesman for the Association of British Insurers (ABI), says: “Each year, travel insurers help hundreds of thousands of travellers whose holiday did not work out as planned – from having to cancel going, to falling ill abroad and needing emergency medical treatment. So it is vital that you arrange travel insurance well in advance. It can make the difference between good holiday memories and a very expensive and traumatic experience.”
Give pensions a workout
Sarah Coles, a personal finance analyst at Hargreaves Lansdown, says that as well as making sure you’re saving enough into workplace pensions, people “should also brush up on the scheme itself, and whether there’s anything extra on offer from your employer if you agree to pay more into the scheme. The growth of your pension pot comes down to three things: how much you contribute, how long the money is put away for, and how much your investments grow,” she adds. “The only part of this that doesn’t involve you working harder is investment performance, so it’s worth considering where your pensions are invested.”
Dust off savings accounts
Rachel Springall, a finance expert at Moneyfacts.co.uk, says: “The challenger banks are still offering some of the best rates on the market, so it’s wise for savers to consider these more unfamiliar brands.” She suggests using apps which help you work out what you can afford to save, and adds: “Opening a regular savings account can also spark the savings habit.”
Spring clean investments
Ana Cuddeford, investment director at M&G Investments, says: “While you should always take a long-term approach to investing, it’s also important not to let the dust settle on your portfolio. An annual spring clean is a good idea to make sure your money is working as hard as possible.” She also says life events, like marriage or a new baby or job, should trigger money reviews.
How to cut bill costs and spring clean your finances
Check you’re not doubling up
Are you paying twice for a particular service? As many as 10% of adults across the UK may potentially be paying twice to protect their personal gadgets, simply by not checking the terms and conditions within their contents insurance policies, research by comparethemarket.com suggests: in a survey of more than 2000 adults, one in 10 admitted they’ve taken out separate gadget insurance on items already covered by their contents policy.
Chris King, head of home insurance at comparethemarket, says: “It’s always worth checking your contents insurance before making any big purchases, as you may find that you do not need to take out separate insurance to cover your must-have gizmo. If you find your gadget isn’t covered by your contents insurance, it’s worth calling your insurer and seeing if this is something that can be added onto your policy.”
Recommended: Insurance advice – what to look for when buying car, home, health and travel insurance.
See if you can save on your energy bills
More than 100 fixed energy tariff deals are ending or have done already across the first three months of 2018, comparethemarket has also found. Its analysis of the fixed tariffs ending in these months found the average increase to energy bills could potentially be £192 per household.
Peter Earl, head of energy at comparethemarket, says: “When fixed tariffs are coming to an end, it is essential to engage with your supplier, shop around and switch onto the best deal to avoid being rolled onto these expensive default tariffs…. A £200 hike in energy costs could be highly damaging to the finances of many households and is easily avoidable.”
Ditch unwanted subscriptions
If you’re paying for something you don’t use, it’s money down the drain. Do a check of your regular outgoings and have a cull of anything you’re not getting value from. For example, if you’ve got a gym subscription but you don’t make trips there very often, work out whether it might be cheaper to pay for individual classes. Make sure you’re aware of cancellation policies though and that you follow them correctly.
Have a spring clear-out
Boost your income and by selling items you don’t use and won’t miss on websites such as eBay and Gumtree.
Make the most of cashback and discount websites
Before you make a purchase, see if you can make it any cheaper by using a website with a discount code, or one offering cashback on your purchase.
