Time for a reset? 6 steps to give your finances a spring clean

money spring clean your budget

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Money


Time for a reset? 6 steps to give your finances a spring clean

By Ellen Scott

11 months ago

6 min read

New season, new saving goals? Take the arrival of spring as a handy reason to give your money situation a refresh. An expert tells us how. 


Spring is in full swing, and alongside the urge to clear out your wardrobe and do a deep clean of your bathroom comes a need for freshness in other areas, too… including your finances. While we tend to think only of new year’s resolutions as a time to spend more wisely and hit our saving goals, and thus give up in a flurry of impulse buys the moment we mess up on our tight budgets, the newness of spring can be a great impetus to get back on top of our personal finances. 

“Springtime is the ideal time to give your finances a review,” argues Rajan Lakhani, personal finance expert at smart money app Plum. “Not only does the end of the financial year make it a good time for personal finance decision-making, but you’ve still got plenty of time to budget for big expenses later in the year. And with the long Easter bank holiday coming up, it means even the busiest people can find an hour or two to sit down and blitz their personal finances.”

What does spring cleaning your finances actually look like, though? Don’t worry, you don’t have to commit to a no-spend year (unless you want to). Instead, it’s about looking at your personal finances head-on and making realistic changes to get your money situation in better shape. 

Lakhani says: “Of course, everyone’s situation is different, and for personalised advice you should always consider speaking to an independent financial adviser. But there are a few key tasks that you can easily do yourself to get your finances ship-shape for the year ahead.”

Let’s break down those key tasks for the ideal spring clean budget checklist. 

Review your income and outgoings

We’re all familiar with the absolute fear and dread that arises when taking a peek at your bank balance. But there’s no way to tackle money issues if you don’t know where you’re going wrong. Plus, the more frequently you keep an eye on your finances, the less scary your bank statements become. 

“A good place to start is by doing a thorough review of your income and outgoings each month,” Lakhani recommends. “Perhaps you have had a pay rise in the last 12 months or have changed your working circumstances so you have more money coming in, which could have an impact on your budget. 

“On the other hand, inflation has increased the cost of day-to-day spending, with everyday items still costing a lot more than they did last year, so you need to take that into account too. Use an app to help you categorise all your spending to make this a quick and easy task.”

A calculator and pencils

Credit: Getty

Declutter your expenses

Lakhani says: “Once you know exactly what you are spending, I would think about giving your expenses a declutter. First step would be to unsubscribe from any subscriptions that you are no longer using. Then consider other discretionary spending and whether you can cut down on anything, for example takeaways or impulse purchases. Focus on patterns of spending which, if reduced, could have a massive impact on your budget over time, rather than one-off splurges that are unlikely to be repeated.”

Plan ahead

How many weddings are you attending this year? Are you keen to do some travelling this summer? Need to finally get your bike properly serviced? There will be moments coming up that require a fair chunk of spending. Note them all down on a calendar so you know exactly when your budget needs to flex around shifting needs. 

“Map out any big spends or financial changes that are coming up,” Lakhani advises. “Facing up to any large expenses in advance is a really good move, as it gives you time to plan for them. This is especially true if you have a fixed mortgage deal coming to an end in the next 12 months, as interest rates now are likely a lot higher than when you last fixed. It’s worth speaking to your lender well ahead of time to secure a deal you can definitely afford. If you are self-employed, the start of the new tax year is a good time to start saving for next year’s tax payment.

“But it isn’t just the serious stuff that you need to plan for – you can also think about more fun expenses, like holidays, birthdays and Christmas. Setting aside small amounts of money regularly is a good way to save when you have a particular goal in mind. Use an app like Plum to create a ‘pocket’ so the money for specific goals doesn’t get mixed up with your other savings.”

woman holding bank card money debt

Credit: Adobe Stock

Create a saving strategy

How much are you really saving each month? How much would you like to be saving? Take this spring reset as an opportunity to suss that out. 

“You can find out from analysis of your outgoings how much you are saving each month,” Lakhani says. “If you would like to save more or even just save more efficiently, you could finetune your method of saving. Automatic savings is a good way to make sure you put money aside regularly, and linking your bank account to a savings algorithm like the one Plum offers means your savings will flex depending on how much you are spending. You can also set up automated saving rules to put money aside, for example rounding up purchases or depositing whenever you get paid.” 

Make sure your savings are maximised

“Once you’re happy with your saving strategy, you can consider the best ways to maximise your savings,” Lakhani says. “Interest rates are at a 15-year high, which means there are some great offers on savings currently. For savings that you might need in an emergency, look for an FSCS-protected easy-access savings account with a high interest rate. For the longer term, think about higher rates via fixed rate accounts, or consider investing your money in stocks and shares to potentially secure inflation-beating returns, but remember that your money will be at risk if you choose to invest.

“Your pension should form part of your overall saving strategy, as it can be a tax-efficient way to save for retirement whenever your salary increases. So make sure you don’t forget about your pension pot alongside your other savings and investments and consider combining pots to save on fees if you can. On the subject of tax, tax wrappers should be on your radar too, so your gains are protected from capital gains tax where possible. For example, it may be worth using a cash ISA or stocks and shares ISA that will give you a tax-free allowance of up to £20,000.”

Don’t forget renewals and regular expenses

Lakhani adds: “Finally, it’s always worth going through your other financial admin from the year, and marking your calendar for any key events coming up in the year ahead. If you are paying yearly for insurance, for example, you may be rolled automatically onto a more expensive deal when your 12 month contract comes to an end, so it’s always worth giving your provider a call ahead of time to see if you can find a cheaper option and comparing different offers online.

“With all these tasks done, you should be financially fighting fit for the year ahead.”

Content for informative purposes only and nothing is to be construed as investment advice. For the use of the Plum app, T&Cs apply.


Images: Getty; Adobe

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