Spring is in the air, bringing with it the opportunity to clear out that chaotic cupboard, bring order to the garage or tackle your finances. Take this opportunity to get organised.
We know spring cleaning your finances is not an easy task. There are debit orders, loans, outstanding balances for clothing accounts, car or house maintenance invoices, income statements, retirement plans, insurance policies, and so many other boxes to tick.
Follow these essential steps to take your finances into the right direction:
- Make a list of all your financial items: insurance (life, car and household), debt, savings and even unnecessary subscriptions.
- Examine your monthly budget and if your expenses exceed your income, cut out things you can do without. Try to get rid of all expenses and purchases that are not essential. Be very clear on the difference between needs and wants.
- Aim to set aside at least 20% of your disposable monthly income (that’s the money left in your account after your monthly deductions). Put this amount into a savings account. If you can’t afford 20% then settle on 10% or even 5% - any savings amount is better than no savings.
- Get your debt under control. Know the difference between good debt and bad debt. A home loan, for example, is generally considered to be a good debt because property is an asset, and its value can grow. When you use a credit card to buy an expensive handbag, that is regarded as a bad debt.
- Pay off the most expensive debt first.This is the debt that carries the highest interest rate and is costing you the most.
- Make sure you prepare for your retirement. The sooner you start the better. Get a retirement annuity, invest in a life insurance policy and put your money somewhere where it can grow.
How will you spring clean your finances? Tell us in the comments section below!