Spring has well and truly sprung, and with the long Easter weekend fast approaching, there’s no time like the present to get your home and finances in order. From cutting back on unnecessary spending to maximising your savings, here are a few simple things you can do to spring clean your finances and start saving today.
Set a budget
The first step to sorting out your finances, is understanding how much you’re actually spending! You can do this by taking a look at your bank or credit card statements from the previous month and analysing your spending habits. Group together any similar costs under headings like ‘bills’, ‘food and drink’, ‘leisure’ and ‘entertainment’, for example, and think about which of these groups are ‘essential’ and which are ‘nice-to-haves’.
Once you’ve broken down and analysed your spending, you may find you’re able to cut down on some of your outgoings immediately. Studies have shown that the average British person wastes up to £600 a year on things they don’t need or use anymore, so don’t be afraid to take drastic action! Ask yourself if you really need a subscription to every streaming platform available or whether you can pause that expensive gym membership.
Once you know where your money typically goes each month, you can begin to set some boundaries for your spending. A budget can help you reduce unnecessary spending so you have more to live comfortably, and even save towards your retirement. One way to do this is by creating a spreadsheet, or using an app that will help you easily monitor your spending. Read our list of the 10 best money saving apps. Whichever option you choose, it’s important not to budget down to the last penny, as you’ll need to allow a buffer in case any nasty surprises crop up.
Think about your spending habits
Most of us are guilty of being creatures of habit, and sticking to a routine. This is the same with our spending, where we’ll often buy something without thinking if it’s actually needed. However, making a few small changes to your spending habits, could result in a much healthier bank balance. Here are just a few ways to reduce your outgoings:
Try some of the cheaper supermarkets and replace some of the premium branded goods you regularly purchase with the supermarket’s own version.
Consider making a packed lunch instead of eating out when you’re next at work.
Make sure you’re using all the food in your cupboard to minimise your food wastage. If you like to buy in bulk, it’s a good idea to rotate your items so the oldest is always at the front. If you’re ever in a situation where you only have a few items left in the house and you’re unsure how to use them, rather than goin shopping, consider using an app that will help you find a recipe using the ingredients you have lying around. Supercook and BBC goodfood are two great examples.
If takeaways are your guilty pleasure, why not mix it up sometimes and treat yourself to a homemade curry or chinese instead?
Cut back on your use of public transport whenever possible. If you can, walk or cycle for even part of your journey, which will save you some money and reduce the impact on the environment. Plus, regular exercise also comes with added health benefits!
Think of cheaper ways to socialise. Why not have friends round for a games night, for example, instead of heading out somewhere and getting carried away? Having a virtual games night will be even cheaper as you’ll be able to save money on travel, plus you’ll only have to cater for yourself!
Avoid impulse shopping
I think we’ve all been tempted to buy something we’ve seen in a shop window, or that’s magically appeared in our social media timelines. If you don’t want to spend money on unnecessary luxuries, you’ll need to be strict with yourself and avoid the situations where you’d usually spend on impulse. You could try blocking your favourite online shops on your web browser, and avoid visiting the High Street and any particular stores where you’re most likely to get carried away with your spending.
When it comes to grocery shopping, a key thing to avoid is visiting the supermarket whilst hungry. Research shows that people who do this are likely to buy more than they need and choose higher calorie items too. Make sure you always make a shopping list before heading to the shops, and stick to it.
By thinking ahead and making use of any sales means you can avoid expensive last-minute panic buys. Planning what you’re going to buy for birthday and Christmas presents well in advance can help you stick to a tighter budget. For example, shopping for Christmas during the end-of-season sales between now and December, could help you find some bargains that will make perfect gifts for your loved ones.
Switch and save
When it comes to renewing our energy, insurance, tv and broadband contracts, most people typically stick with the same provider. However, by doing a little bit of research and shopping around, there are some huge savings to be made! It’s estimated that you can save up to £300, simply by switching to another provider. There are lots of comparison websites that can do all of the leg work for you, including Money Supermarket and Compare the Market.
You can also look for savings when booking a trip too. If you’re planning to go on holiday, don’t leave it until the last minute to book, and do your research. The first thing that pops up when you search for your destination and desired dates, often isn’t the best deal, so don’t be afraid to make a note of the prices and keep looking for a cheaper option. You’ll be likely to save even more money if you can avoid travelling during the school holidays, choosing not to fly straight to your destination, or avoiding the most popular airports. Getting a train part of the way, for example, can be another way to make a journey cheaper.
Maximise your savings
Making the most of what you have is vital, so you should ensure you’re optimising your savings and the allowances that come with them. Rather than just saving into your current account, consider opening an ISA or a longer-term savings account so you can benefit from tax-free saving and compound interest. Compound interest is the interest that you earn on your saving’s interest, and can turn a small savings pot into a significant amount when left untouched.
Pensions come with lots of benefits, including a 25% tax top up on most personal contributions from the government, which means they can often be more lucrative in the long-term than interest growth alone. For 2020/21 most savers can get tax relief on pension contributions up to £40,000 or 100% of their salary (whichever is lower).
With the use of contactless payments becoming increasingly popular, there are lots of savvy ways to save this way. Many banks now offer savings round up features to help their customers save with minimum effort. You can choose to round your payments up to the nearest pound or more, with the difference being tucked away into a savings pot. This can allow you to slowly build up your savings, without seeing a huge increase in your outgoings.
You could also set yourself a challenge to save a certain amount of money each week or month. One example is if you were put away 1p on day 1, 2p on day 2, 3p on day 3 and so on, then you would save just under £700 in 365 days.
Consolidate your pensions
Consolidating any old pensions you have into one pot can be an effective way to tidy up your finances and give you better control over your retirement savings. Putting a bit of time into finding any old paperwork you have from your old providers or employers can simplify your long-term savings plan and even save you some money in the process too. Providers will usually charge you an annual management fee, but there may also be extra charges in the small print too. These fees will differ from provider to provider, so consolidating to a cheaper plan could save you in the long-term. Just having one pension to keep an eye on will give you full transparency over the fees you’re paying, and will make it much easier to track the performance of your investments.
Combining your pensions can seem like a complicated process, but with PensionBee it’s simple. You can sign up in just a few minutes, and you’ll be assigned your very own BeeKeeper who’ll be on hand to help you with any questions throughout your pension journey.
What are your top tips for spring cleaning your finances? Tell us in the comments section at the bottom of the page!