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Spring is the perfect time to start afresh and clear out the clutter and cobwebs, it’s also a great time to sort your finances out too. Every April I purposely set some time aside to have a good old Spring clean of our finances. The new financial year is the ideal time to make sure your money is doing exactly what you want it to.
I thought I would share with you the steps I follow to make sure I’m making the maximum savings for our family. Once I’ve completed this process I can then make a plan for the financial year ahead.
Where Is Your Money Going?
The first thing to do is go through your bank statements and highlight any spending that wasn’t essential. I can spot our unnecessary spending a mile off. Add up all those little trips to the convenience store and fast food outlets. You will probably be shocked at the total amount. I find this exercise a good wake-up call when I know I’ve been over-spending.
Also, check that you are not still paying monthly for things like subscriptions to a magazine you never get time to read or for the gym that you never visit. I know lots of people who never cancel their direct debits for services or products they just don’t need or use any more.
You Need A Budget!
Once you have figured out where your money is going you need to sit down and write a budget. You need to get all those figures down on paper or on a spreadsheet.
You can choose whether you want to do a yearly budget or a monthly one. We create a new budget each month as our income can vary with me being self-employed.
Start with all your outgoings and be honest, if you have a haircut each month or need to buy a birthday gift then make sure you include it in the budget. Try to think of absolutely everything that might arise throughout the month or year. For example, we know our MOT is due in February so we always budget higher for this.
Compare your monthly outgoings with your income to make sure you are not over budget. If you are, then start looking at ways to cut some things out altogether. You might discover that you need to make some extra money to supplement your budget.
Compare, Compare & Compare Again!
Make a list of all your utility bills then use a comparison site to see if you could be paying less. If you could then seriously consider changing your supplier. Changing suppliers is usually quick and easy and definitely, worth the money, you will save.
Do the same thing with any insurances you have too to get the best deal possible.
If you are stuck in a contract then make a note of end date and be sure to revisit a comparison site in plenty of time before you renew.
Organise Your Paperwork
Get yourself a ring binder and some clear A4 plastic wallets and organise your paperwork and bills into sections. For example, gas and electric, insurances, phone and broadband, this way you will always be able to find what you are looking for quickly. You could also make a note of any renewal dates on the top of the paperwork as well as in your diary.
I find it really helps to file paperwork as soon as it arrives. This way nothing gets lost and you stay organised. Make sure you shred any sensitive paperwork before putting it in the bun.
Once you have your budget in place and have saved yourself some money it’s time to think about savings. You might have something specific you are saving towards or perhaps you just want to build an emergency fund. Any amount even the smallest will soon grow.
I find that setting myself a savings goal really helps to keep me motivated. Any extra money I earn is always allocated to any savings goals we might have.