What would you say if I told you it’s time to spring clean your finances? You’d be forgiven for quickly finding something else to do – after all, nobody wants to bury themselves in statements, and over 60% of families are said to be ignoring their current financial problems. That said, it really can be quick and easy to get your finances into order, and give you a much more optimistic view of the future. Here’s what you need to do to spring clean your finances!
Whether you’ve got a budget at the moment or just spend what you want and wince when you see your statement, the first step to spring clean your finances is to record your spends. Print off a budget planner, and stick it in your diary or to your fridge. Write down EVERYTHING that you spend. That includes coffees, sandwiches, chocolate bars bought from pennies you found in the washing machine…anything. See what you actually spend in any given month.
What would your dream target for the next twelve months be? Would you like to pay off a certain debt, or fund a safety net, or start saving for a special event? Avoid using the credit card, or the overdraft? Note down your goal, and split it into smaller goals. For example, if you want to save a certain amount, set a small target for the first month, or if you want to avoid building debt, set yourself a no-debt month challenge.
Okay, so this might sound horrible – and most people actively avoid doing it. But if you really don’t want to, try and work out why. Are you aware that you’ve spent more than you should have? Have you bought things you are embarrassed by, or didn’t need? Working on why you are uncomfortable will help, so give it a good think. If tracking isn’t working well, try a different method, such as phone tracking apps or collecting receipts into a folder to analyze later.
Use your spends tracker, receipts and goals to note down ways you could reach the goal. Time yourself for ten minutes and see how many (no matter how crazy) you can come up with. Then pick the ones you think will be most successful. For saving more, you could choose to save money at the supermarket, or use more vouchers, or drive less to spend less on fuel. To cut down on credit, you could sell things or get a second job to earn more money.
It might seem obvious that to reach a money goal you’ll either have to save money, or make more. For more people, though, they don’t know how to do either. That’s why no spend days are so valuable. Not only will they actively add to your target, but they make you aware of what you do spend day-to-day without realizing it. Set a no spend day, only do free activities, and only cook with food you already have. See how it feels to keep your purse closed, and how you feel at the end of the day.
Make a list of all the people or events you’ll need to buy gifts for in the next four months. Then see how you can get these as cheap as possible. That doesn’t mean giving a bad gift – search voucher sites, eBay and similar sites to find an affordable gift that will be loved. Have the same type of hunt for food. Make a meal plan for the next 20 days, and see how you can get the ingredients as cheap as possible. It might take longer, but you can save a lot for the investment.
Are you an emotional spender? Do you buy clothes to give yourself a boost, or invest in a treat coffee every day? Pick up a chocolate bar after a hard day, or have piles of magazines each month? Add up how much every emotional spend would cost you for the rest of the year, and how much of a difference it makes to your budget and goal. Then try and cut down as much as possible. It’s totally worth it.
Finally, spend some time checking statements for automatic billing services that you don’t use, and cancel them. Got a pile of magazines you don’t read or enjoy? Get it cancelled. You’ll be surprised how much these “secret” payments can add up to.
Once you’ve finished, spring clean your finances every few months to ensure that you are still working towards your goals, and haven’t picked up any bad spending habits again. It might feel tiring and stressful, but when your money is under control, your life is to. And don’t forget to share your best money tips, too!