Organising your money might not be at the top of your most fun things to do. However, now is the right moment to get your cash decluttered and become more financially organised.
If you take a few simple decluttering steps, you will find you have less stress in your life and greater financial clarity.
So, where to start? Check out these four money-decluttering tips to get financially organised.
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Compartmentalise Your Bank Accounts
As you might keep different document types in separate files in your office, you can similarly compartmentalise your bank accounts. Doing so will give you greater clarity across your income and expenditure.
You can set up separate accounts for regular bills, savings, and daily expenses. Compartmentalising your money in this way means you’ll be less likely to spend allocated money on something else. For instance, if the money you want to save is in the same account as your daily spending funds, you might find it more challenging to save.
Moreover, if you have any money allocated to long-term savings, it should be in a specific savings account or ISA. For short-term savings or an emergency fund, a separate current account or easy-access savings account should be sufficient.
Mobile banking applications make it incredibly straightforward to set up. If you take this simple step, you’ll go a long way to decluttering your finances and getting more clarity of your money matters.
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Review Your Bills and Regular Payments
Having set up separate accounts, you will have greater clarity over your expenditure. Therefore, you’ll find it easier to review and keep track of your spending.
It is crucial to review what you are regularly spending. Setting up standing orders and direct debits makes it easier to manage your payments. However, it means that the amount you pay for services or utilities can rise without being aware of the increase.
If you are paying significantly more than you did when you first purchased the packages, you should look for cheaper alternatives. Similarly, if you are not using the service to its fullest, you should consider whether you can justify the expense.
Pay particular attention to TV packages, broadband, mobile phone contracts, and the like. These packages often come with attractive introduction deals, but the costs can rise sharply when the introductory period ends.
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Get Free From Debt
There are few better feelings than getting free from your debts. The good news is that you can start moving towards debt freedom right now by making a few small sacrifices. Of course, nobody enjoys making sacrifices as it generally means giving up something you enjoy. However, rather than focusing on the negative aspects of these small sacrifices, imagine how great you’ll feel when you clear your debts.
First, clearing your debts might seem like a mammoth task, particularly if you have amassed a significant debt or have several smaller obligations. An excellent way to get started is to make a list of all of your debts.
Rank them in order of interest, with those with the highest interest rates at the top. Getting rid of the high-interest debts first will mean that you have more money available each month to tackle your other debts.
Debt can not only be damaging financially, but it can also cause considerable emotional stress. If you are experiencing difficulties in dealing with your debt, support services exist to help you manage your debts more effectively.
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Look After Your Future Self
Decluttering your finances will undoubtedly make your life less stressful and more enjoyable. It will also prove beneficial to your future self. If your retirement is three or four decades away, you might find it challenging to understand what your life will be like then. Therefore, starting to plan for your retirement as early as possible is essential if you are to put your future self in a comfortable financial position for when you are no longer working.
Start Saving Into a Pension
Saving into a pension is probably the best way to look after your future self. However, if you are setting up a new pension, where do you begin? Chances are, you might already have started.
If you are employed, over twenty-two years’ old, and earning over £10,000 a year, you will likely be enrolled in a workplace pension scheme. You make tax-free contributions of 5% of your gross salary into your pension. This money is topped up by a further 3% contributed by your employer.
Workplace pensions are an excellent fall-back in the absence of private pensions. Although you will likely receive the State Pension, it’s doubtful that this benefit alone will be sufficient to support you in your retirement.
You can check the amount of State Pension you will receive by checking your pension forecast at https://www.gov.uk/.
Before looking at options for your pension, consider using a regulated financial adviser like Portafina or, view the info at Money Helper.
