It’s cold out but now that the clocks have gone forward it is officially Spring. Traditionally this is the time of year that we clean up around the house and throw out the things we no longer use or no longer find useful.
MoneyExpert.com suggests that this spring we should all take the opportunity to spring clean our finances and throw out the things we no longer want or need. It’s time to turn over new leaf and below we show you how to get started
Manage your money
Conducting a spring clean will probably involve making a few changes in terms of products and suppliers. But don’t be afraid to take a Harry Redknapp style approach to managing your finances. Just as the Pompey manager regularly cleans out his squad be brutal! If your team of financial products aren’t working for you then cut them from the squad and bring in a product which will help your finances perform better.
Work out where you are
By doing a few simple sums, you can review your financial health easily. The first step is to calculate all your incomes and find out how much money you have coming in. Bearing this figure in mind whenever you’re thinking about making a significant expenditure or investment will give you a good measure of whether it is affordable.
Secondly, calculate your average outgoings. Review how much you’re spending on living, investing for the future, your property or rent and your disposable income. If you find that this figure is bigger than your total income then it’s time to get organised.
Where does your money need to go?
The next step is to work out where your money really needs to go. For those of you with a mortgage, this is likely to be the highest priority as repossessions are on the rise and are a financial and emotional nightmare.
As a society we are burdened with a large amount of debts on credit cards and in loans and so for most of us this will be priority number two. If you’re not thinking about how you are going to pay it off you could end up in trouble. Nobody wants to be living in the shadow of debt forever, so get organised.
Many of you may have seen the huge range of consolidated loans advertised to help in these kinds of situations. They can provide good value but you have to understand what it is you are signing up to.
If you have several types of debts with different organisations such as on credit card, store cards or a personal loan, then they will often be charging you different rates of interest. A consolidation company will pay off these debts for you. You are then left with one larger debt with a single rate of repayment which will often be lower than the rates you were paying before. MoneyExper.com’s main advice is to think the consolidation through. Check that you will actually be paying less a month after consolidating.
What about if you are sitting on top of a bit of money? If you’ve been sitting on top of a steadily growing pile, then perhaps it’s time to think about investing it more effectively. Spring coincides with the end of the tax year and is therefore ISA season. It is important to take advantage of it. If you invest before the 5th of April – the end of the 2006 tax year in April, then any gains – whether it is interest or capital gains – you make on this money will be tax free. This could be particularly helpful if you are a high income earner as all your savings will be taxed at 40% otherwise. There is a wide choice of ISAs available all offering different benefits and rates of return. To find out more about what’s out there visit MoneyExpert.com for details on cash ISAs and shares ISAs.
Get value for money this spring
Whether or not you’re going to make the time to clean your house it makes sense to give your finances a dusting. Think about where your money is going and whether you could be making better use of it.
If the debts have racked up then make a plan to pay them off.
If you’re lucky and the spring review reveals a bit of surplus cash then think about making an investment. Investing in ISAs could mean you keep the tax man away from your money!