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As we enter the second quarter of 2023, it's an excellent time to perform a financial spring clean. By taking some time to organise your finances, you can reduce stress, save money and ensure you're on track to meet your financial goals. Here are some steps you can take to make the most of your financial cleanup.
▶ 1 - Financial goals refresher
As we go through life, we experience the unexpected, change our minds and develop new goals and targets. It is great to get into a habit of checking to make sure your financial goals and plans align with your financial affairs. Look out for things such as health-related changes that may affect your insurance policy, the purchase of a new asset or a new addition to the family.
▶ 2 - Organise all financial documents
Gather all of your financial documents, such as bank statements, credit card bills, investment account statements and insurance policies, and keep them all in one place so that you can review them all at once.
Organise these in a systematic way so that you can easily access them in the future. You can do this by using digital tools such as spreadsheets or financial management software, or by creating a physical filing system. Keep your most important documents, such as your will, insurance policies and tax returns, in a secure location like a safe or a safety deposit box.
▶ 3 - Evaluate your budget
Review your monthly budget and assess whether you're spending more than you're earning. Identify areas where you can cut back on expenses, such as subscriptions or dining out. Make a plan to adjust your spending for the next quarter to ensure you stay within your budget.
▶ 4 - Check your credit report
Review your credit report for any errors or fraudulent activities that could negatively affect your credit score. You can access a free copy of your credit report from each of the three major credit bureaus once a year at checkmyfile. If you notice any mistakes or discrepancies, report them to the credit bureau right away.
▶ 5 - Review your insurance policies
Review your insurance policies, including home, car and life insurance, to make sure you have adequate coverage. Check whether your policies are still suitable for your financial situation and consider getting quotes from other insurance providers to see if you can save money on premiums without sacrificing coverage.
▶ 6 - Pay off debt
If you have any outstanding debts, use your quarterly financial cleanup to revise your plan to pay them off. Consider using the snowball or avalanche method to prioritise which debts to pay off first. A useful tool is an eligibility checker, which allows you to check the likelihood of being accepted for credit before applying. If you're struggling to pay off debts, consider seeking the help of a financial advisor or credit counselling service.
▶ 7 - Review your money habits
Building good financial habits helps to keep you on track to achieve your financial goals and not make errors you will regret later. Check your spending history using a bank or budgeting app, and if you see an area with excessive spending, identify if this was a one-off occurrence or a recurring event.
Also, check to see if you have maintained your savings goals. Set up standing orders to move money to your savings account every month if you find yourself struggling to keep up the habit manually.
If you are at the very early stages of taking action to improve your financial circumstances, you may find the 6-Part Financial Review useful in helping you take a bird's-eye view of your situation.
A quarterly financial spring clean can help you achieve your financial goals and avoid any unpleasant surprises. By following the above steps, you can ensure that your financial health is in good shape and you're making the most of your money in 2023. If you feel you would benefit from help, find out how we can support you here.
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This article is for informational purposes only. It should not be considered Financial or Legal Advice. Mind Over Money assists you in making better economic choices, improving your wealth, and building financial confidence. Consult a financial professional before making any major financial decisions.
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