Review, declutter and sort your financial habits
Managing Director of Rockwell Financial Management, Robert Whelan, shares his tips on how to spring clean your finances in the New Year.
On the principle that there is never the wrong time to do the right thing, here are 9 Tips to get started on in the New Year.
1. Throw away those bad spending habits
Overspending often happens out of habit. Grab your bank statements and a highlighter to look at what you’re spending. Try not to pass judgement on yourself, simply identify your habits and use this opportunity to make improvements.
List out your spending into simple categories and ask yourself if you need the expense or if it makes you happy, and if it doesn’t do either, thank it for its service and get rid of it. Review variable expenses that can easily be cut if they're not being used such as music or TV subscriptions and gym memberships. Try tracking your spending for a month and identify areas of overspending and then create a spending plan where you allocate every pound to where it needs to be spent. This is far more positive and rewarding than a budget plan as it feels less restrictive.
Top tip: If you are an impulsive spender, implement the 48-hour rule when it comes to online shopping. Leave the items in your basket for 48 hours before deciding whether to go through with the purchase. This allows your brain to make the decision when you’re feeling more rational and you may decide that you no longer want the items.
2. Simplify your finances
Nobody likes complicated money matters so make things easier for yourself with something as simple as automating your savings. This will mean you’ll have fewer financial decisions to make. Set yourself up a standing order to automatically save money each month - you can fit this into your spending plan from above. For smaller savings that add up quickly, there are some clever apps on the market that round up your spending to whole pounds and filter it off to an account automatically.
3. Focus on building up a financial cushion
We all need a “Rainy Day Fund’. Ideally this should be 6 months of expenses set aside in an instant access savings account for emergencies. If this seems too challenging, start with something small. To start off, shaving €20 off your food spend each week could help you save over €1000 a year.
4. Organise your financial clutter
Start by making a mess! Throw your financial paperwork into a pile. Keep the important paperwork like tax and pension statements but everything else can be cut back to just the last 12 months. Dealing with financial paperwork could be best organised in folders digitally. Use an app like ‘Adobe scan’ to scan in your statements and create folders on your computer labelled up so you can find documents easily.
5. Swap or sell
Consider selling your unwanted items instead of hoarding them - this is a great way to gain a small cash injection for the beginning of spring! You can do this with Done Deal, Adverts.ie, eBay, Facebook Marketplace, Gumtree or local events. Put the money you earn into your 'OMG! Fund' for those unexpected costs that crop up. You’ll thank yourself when the car needs something and you have it covered. Savvy!
Alternatively, swap items like clothing at specialist events for items that you really want. This way you're getting the buzz of shopping without spending any money.
6. Plan ahead and take stock
In the same way that you need clothes for all seasons, think about what money you may need for the next 12 months. It’s often the unexpected costs that cause the most amount of stress such as car repairs but there's also the recurring costs that tend to slip our minds such as insurance renewals and the costs you know are coming such as Christmas.
When dusting off your money, don’t forget to tackle the bigger-picture finances such as pension contributions and regular savings. These are often the areas that gather more dust than the rest.
7. Review your bills
Review your bills to make sure that you are getting the best deal. Plans change throughout the year so make sure you are on the ball with what you're spending! Switching and comparison sites can help you identify the company that may be best for you based on your usage. Don’t stay loyal to a brand if they aren’t offering you competitive rates.
8. Spring clean your mortgage
Your mortgage is likely to be one of your biggest expenses. If you’re looking to move or re-mortgage, Rockwell Mortgages search through all the lenders to find the right deal for you. If they find you a deal with lower monthly payments you could consider keeping your payments the same, potentially taking years off your mortgage and saving you thousands in interest in the long-run.
9. Dust off those credit cards
If you’ve built up credit card balances, then check out the interest rate you’re paying. If you’ve just finished a 0% period, the interest will increase your payments and you could be better off by transferring to a different card. Visit comparison websites for the best deals to help you manage your debt and reduce the amount of interest you could pay.
Start the new year with a spring in your step with the help of some of these tips! A little planting of the right seeds now can help set you up for the rest of the year.
Merry Christmas to you and yours!!