Having a good tidy-up around the home can leave you feeling more relaxed and calm. You can achieve a similar effect by getting your finances more organised. What’s more, you can get started straight away, and that is undoubtedly the best time to get on with it. To start getting yourself more financially organised, here are four top tips for decluttering your finances.
Organise Your Bank Accounts.
Think about how you organise your files on your PC or in your office. You don’t keep everything in one directory, right? So, why should things be any different for your money? Most people keep all their money in a single bank account, which is definitely not efficiently organised.
You should consider setting up different bank accounts for the various aspects of your finances. For instance, you could have separate accounts for spending on living expenses, bills, transport, savings, retirement, and so on.
You will want to choose different types of accounts for each category of your money. For example, a current account is suitable for living expenses and bills, as you need easy access to this money. However, saving for your retirement is more suited to a pension fund.
Compartmentalising your money in this way will make your finances easy to manage and less stressful. Also, with online banking apps, it is straightforward to sort out.
Review Your Regular Spending.
Regularly reviewing your direct debits and standing orders will allow you to track when they are getting too high and start looking for cheaper alternatives. You may be surprised at how much you are paying for services such as broadband, TV packages, mobile phone contracts, and the like. Indeed, these costs may have increased considerably since you first purchased them.
When the time comes to renew such services, look for cheaper alternatives. There are plenty of comparison sites that allow you to search for better deals on all manner of products and services. Also, setting up payments via direct debit can often save you some money, so this is something you should consider doing. Finally, set a payment date that comes just after your wages arrive in your bank account. Doing so will remove the stress of worrying you’ll have no money left to pay your bills.
Clear Your Debts.
Becoming clear of debts will give you a tremendous sense of satisfaction and relief. But, more importantly, perhaps, it will provide you with more disposable income each month because you will not be paying off the interest on your loans.
Of course, to clear your debts, first, you’ll have to make some sacrifices to find the additional money to pay them. However, rather than concentrating on the short-term pain of these sacrifices, focus on the fantastic feeling of satisfaction and freedom you’ll have when you become debt-free.
Start by making a list of all your debts. Next, rank them in order of how much interest with the highest-interest obligations at the top. Tackle your debts one by one in ranking order, and when you’ve cleared the highest, move on to the next highest-interest debt. Clearing the highest interest debts first will leave you with a little more money each month that you can use to speed up your debt-clearing.
Look After Future You.
Decluttering your finances will reap the rewards for you immediately. However, now is also the time for you to be considering Future You. Indeed, if your retirement is decades away, you might find it challenging to envisage how your lifestyle might be or what you need to sustain that. However, the sooner you start to prepare for your retirement years, the more comfortable your life will be.
How To Start Preparing For Your Retirement.
The good news is that it is likely you’ve already started preparations for your retirement. That’s because employers are now required to enroll qualifying employees into a workplace pension automatically. To qualify, you have to be at least twenty-two and earn a minimum of £10,000 per year.
Currently, you pay 4% of your gross salary into your pension. However, because these contributions are eligible for tax relief, you effectively get an additional 1% of ‘free’ money that would typically have gone to the government. Also, on top of your contributions, your employer pays an additional amount of at least 3%.
Your State Pension.
Currently, the age you can receive your State Pension is 65, regardless of you being male or female. However, if your retirement is some time off, the age you receive your pension may have increased.
You can check when you will likely receive your State Pension and a projection of what you’ll receive on the gov.uk website. The full State Pension is currently £179.60 per week, and if you don’t believe this is sufficient to sustain your retirement lifestyle, you should ensure you have other financial plans in place.
Before looking at options for your pension, consider using a regulated financial adviser like Portafina or, view the info at Pension Wise.
Conclusion.
Organising your finances will remove some stress from your life. Hopefully, you can get started immediately with these four tips for decluttering your finances and will help you on your way.
