It’s not just our homes that need a yearly freshening up—our finances can also benefit from the occasional tidying. If it’s been a while since you took a look at your spending or you feel like you’re in a bit of a savings rut, here are three simple and easy ways to give your personal finance a spring clean.
1. Create a budget
One of the best ways to gain control over your personal finances is by creating a budget because it not only forces you to be intentional about the way you spend and save money, but it also keeps you focused on your money goals.
Use a budget planner or app to track your spending and your savings targets. Once you’ve covered all your expenses, you’ll know exactly how much income you have left over for savings or luxuries. You should also think about your financial goals for the coming year. Are you wanting to scale back spending? Do you want to save for a holiday or a house?
Once you’ve created a budget, it’s important to keep it updated. Income and expenses can change over time, so be sure to amend your financial plan accordingly.
2. Review your debt
While it’s tempting to turn a blind eye on your debts, it’s vital you keep on top of what you owe.
At least once a year, do a review of your combined debts (credit cards, car, personal and home loans) and compare to your level of debt at your last check-up. An increase in debt may mean you need to consider active steps to minimise your bills, or at least look at cutting your spending.
Don’t forget to check the interest rates on your loans to ensure you’re still getting the best deal. It is particularly important to re-evaluate any loans which are subject to an introductory or ‘honeymoon’ rate, as once the initial period is over you may be stung with a shock increase.
Remember, even a small difference in interest rates can mean a significant difference to your repayments.
3. Evaluate your insurance
Every year it’s a good idea to reassess your insurance policies, as inevitable changes to your lifestyle can result in different coverage requirements.
If you have recently bought a house, had children or increased your income you may wish to consider taking out life insurance, or re-evaluating your policy if you already have one. Likewise, your home and contents or renter’s insurance may need to be altered if you have made changes to your home or any large value purchases.
Recently married? You might want to look at trading in your singles private health insurance for a couple’s policy. If you’re thinking of starting a family you may wish to look at upgrading your policy, as most pregnancy and birth related services have a 12-month waiting period.
On top of reassessing your coverage requirements, you should also do some research to find out whether you are still getting the best cover for the best price. Shop around and get some quotes to compare to your current car, health and home policies and don’t be afraid to renegotiate for a better deal.
It only takes a few simple steps to refresh your personal finance and by reviewing your situation at least once a year, you’ll be better equipped to stay on top of your spending and keep the ‘spring’ in your savings.