From time to time your finances need a good clean out and with spring here, now is a great time to start. Here are our tips on how to clean up your finances and cut out the things that might be dragging you down.
Switch to better deals
They say the grass is greener on the other side and sometimes it really is. Doing a price comparison and looking for a cheaper deal on everything from your gas and electricity to savings and bank accounts can make a huge difference.
Gas and electricity prices are constantly changing as the market gets competitive, so doing a simple price comparison can help you find the cheapest energy deal in your area. You’ll be able to see how much you could save compared to what you are currently paying. If you’re on a standard tariff these can often be much more expensive than the deals on the market. Switching your gas and electricity can help towards cutting your overall household bills. An energy comparison tool, like ours, can make switching to a better deal easier.
Tip: If you opt in for online billing you can sometimes get a further discount.
Boost the interest on your savings by switching to a better rate account. It’s easy to leave your money in a savings account and forget about it but it means you could be missing out on earning good rates of interest. The same goes for current accounts. Banks are desperate for your custom, so many will offer competitive rates alongside freebies, cashback deals, welcome bonuses and interest-free overdrafts just to get you to switch. A credit card comparison won’t cost you anything and as for the myth that switching is a big hassle? Did you know new rules introduced in 2013 means bank switching takes only 7 days and all standing orders are automatically switched to your new account? A comparison will only leave a soft search on your credit report. However, once you decide to apply for the account you want to switch to this will leave a hard search on your file.
TV, phone and broadband
With mobile phones being a permanent fixture in our daily lives, how often do you now use your home phone? WhatsApp and Facetime offer free calls to other users, which means many people are getting by with just their mobile. One in five people who pay for a landline actually use it, according to Money Supermarket. If you don’t use your home phone at all, you can consider ditching it as you can now get broadband without a phone line. Otherwise, the other option is to switch your landline provider to a cheaper package, as well as switching your TV and broadband. A bundle, which combines all three or at least two of these, can be even cheaper than getting them separately. Check for the latest deals and compare your TV, phone and broadband with Noddle.
Tip: Before you switch to the cheapest deal you can find, figure out your usage first, as you don’t want to switch and end up paying more for going over the limits. Consider how often you watch TV and which channels you could you do without, as you could switch to just Freeview, which offers a variety of channels for free. For broadband, roughly calculate your internet data usage. There are sites than can help you do this.
Tidy up your credit report and score
If you’re credit score is low it could affect your ability to get approval for a credit card, loan, mortgage or even a mobile phone contract. It can even affect the interest rate you’re offered. Credit scores are becoming increasingly important and play a bigger role that we often realise: it’s like your financial passport so taking good care of it is vital. Here are some easy ways you can boost your score to set yourself up for the rest of the year:
- Check you’re on the electoral roll – If you’re not then register for free. If you’re unable to vote then you can send the credit reference agencies (Equifax and Experian are the other two) proof of your residency.
- Correct any mistakes on your credit report – Check all the information is accurate and up to date. Inform the credit reference agency in question to get the information amended.
- Close old or unused bank accounts – However, keep any long-standing accounts with a good credit history.
- Don’t make too many credit applications in one go – Check your eligibility for a card to minimise the chance of rejection and stagger your applications.
- Make regular payments on time – Pay all your credit payments on time every month. You can set up direct debits to make it easier. If you have low score and no credit history then use a credit builder card to slowly build up your history and improve your score.
Review your debts
Dig out all your credit card, loan and mortgage statements and calculate exactly how much you owe. Don’t forget to compare this to the information in your credit report, which will show you who you have open lines of credit with and outstanding balances. Since you last checked, your circumstances may have changed. Maybe you’ve had a salary increase, come into some money, your household income has reduced, or you’ve had a child. Whatever it may be, any change in your finances will mean you may be able to adjust your debt repayments. If you’ve got more money now, you may want to increase how much you’re paying off on a loan or credit card, for example, especially if you’re close to pay off the full amount and you can avoid paying extra in interest. If the opposite has happened and you’ve less money than before, then you may want to reduce your monthly repayments so you’ve got enough for everyday costs.
Tip: A balance transfer card lets you move existing credit card debt from one card to another and charges a low interest rate for a set period. If you have small payments to make across numerous cards, then you could consolidate these debts into one balance transfer card to reduce the interest you pay and make it easier to pay it off quickly.
Update your budget
For the same reasons above, review your budget and adjust it according to your current financial circumstances. Based on this, you may have more breathing room in your monthly budget or find you need to cut back. Think about whether the current budget is working for you and take into account any recent life changes. Make sure your budget is up to date.
Cut the unnecessary spending
Think about all the things you spend your money on and ask yourself honestly what things you really don’t need or could do without? If it helps, go through at least 3 months bank statements to see where your money is going. If you have a monthly subscription, why not try going paperless? Most magazines now have a corresponding website that publishes the same or similar content that is often free to access, which means you could save yourself a couple hundred pounds a year. Another idea is to switch from branded to own brand goods. For example, switching from branded medicines to a supermarket’s own brand can help you save money, as own brand medicines are usually cheaper. Both medicines have the same clinical effect, except the branded version is sold under a different name specific to that supplier.
Cutting back on the unnecessary spending, even if it’s a little, can be the difference between having an extra £20-50 a month to spend on things you really want or to put towards paying off a debt.
Look for mystery charges
Whilst you’re reviewing your spending, it’s a good idea to scrutinise every pound going out of your account in case you find any mystery charges that could be dragging you down. It could be that you’ve been charged for an extra month of gym membership after you cancelled it, or you weren’t billed correctly for your gas or electricity. Ensure you recognise every payment and outgoing from your account. This can also help to spot and prevent identity theft or fraud early.
Keep on top of financial admin
It’s easy to get behind on all the paperwork but set yourself some time each month to sort through your bills and bank accounts and you’ll find it much easier to keep on top of it. Plus, you’ll be fully aware of your financial health and avoid any nasty surprises.
Financial clutter could mean missing out on making the most of your money. We challenge you to pick a day this month to clean your finances using our tips and see how much you’ve saved.