Spring is here and as is the tradition, it’s a good time to declutter various parts of your life. While it might not always get the same attention as your hall cupboard or garage, your finances might also be in desperate need of some spring cleaning.
Good financial management is key to getting the best value for your money and ultimately reducing stress, and the following spring cleaning tips courtesy of motus.cars can help you achieve that.
Declutter debt
In the spirit of cleaning up, prioritising your debt in the order of how you want to settle it is a good starting point. Mounting debt built up through the year should be settled with any additional income, such as your annual bonus or tax return pay out. The settlement of debt can be prioritised according to the interest rate or number of payments remaining. Credit cards will have a higher monthly interest rate than longer term loans such as vehicles or a household bond, so it is best to settle those first. The quicker you can reduce monthly debt payments, the sooner you will be able to free up disposable income.
Keep an eye on your spending
Taking a close look at your income and expenses is a great way of getting a real understanding of where you stand. The first step is to go through your bank statements and track all the nice-to-have purchases you made. The next step is to eliminate any unnecessary expenses such as memberships that you are not using, coffee on the run and take away meals. It is important to be honest with yourself and not to spend more than what you have. Once you have eliminated all needless spending, try to keep to your budget.
Save for the future
Once you have your monthly finances under control and have settled what debt you can, you should consider short and long-term goals. Short-term goals may include a holiday or tending to vehicle maintenance such as servicing or tyres. Long-term goals can include saving up for a deposit on a vehicle, or settling your outstanding capital balance or balloon payments. Achieving a financial goal requires financial discipline. One of the easiest ways to save is to open a dedicated bank account, which can be linked to your regular transactional accounts and will allow you to easily transfer your savings portion. It is also possible to set up a direct deposit, so that your savings portion of your salary is transferred directly to this account on a monthly basis.
Recalculate loan agreements
If your financial position has improved drastically thanks to a new job or additional household income, it might be a good idea to recalculate loan agreements such as your vehicle finance or bond. Paying these off quicker by making a larger monthly contribution will drastically reduce the interest over the contract period, and could save you thousands in the long run.
The thought of spring cleaning your finances might seem overwhelming to many, but it is one of the easiest ways to cut back on unnecessary spending, plan and save for the future.
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