Getting your finances in order

Andrew Stuckey • May 18, 2020

Getting your finances in order is the kind of task that’s probably been sat on your to do list, gathering dust for a while. While it might never seem too urgent, spending a little while getting those numbers straight can actually have a big impact on your day-to-day, allowing you to save, make plans, and generally make the most of your future.

Out with the old

There's nothing worse than the feeling of carrying the weight of old bills around with you, so take the time to get your existing finances nicely tied up. Whether that's paying off bills, arranging a payment plan with any lenders you have or simply making a plan to stick to how you're going to reduce any debts, a little clarity on your financial history can go a long way in helping you start afresh with a clear head.

Time to reassess

Getting rid of the old doesn't have to just mean paying off old bills either. Take a look at your regular monthly payments, and perhaps even see if you could be getting a better deal elsewhere. Try using a price comparison site to see if you could save money by switching to a different provider for things like your utility bills, insurance policies and even your phone contract.

It's also a great time to clear out or cancel any subscriptions you haven't used recently. While it might be nice to think you'll finally catch up on that magazine subscription now you’ve remembered it’s there, it may well be wishful thinking, so save yourself a little time and money and dedicate an hour to cancelling those long forgotten direct debits.

Nowadays, most subscription services will let you pause your orders with them for a little while rather than having to fully cancel and then re-apply if you change your mind. Try pausing any food subscriptions, postal delivery orders or even your gym membership if you've not used them for a few weeks, and see if it makes any difference to your life not having them - other than having a few extra pounds to your name each month of course!

Learn from the past

Once you've tied up your existing financial loose ends, it can be a good planning exercise to take a look at previous months’ spending to give yourself a little insight into how you might spend your money going forwards. It can also be good to identify areas where, for example, if you had more time or more knowledge, you might have shopped around for a better deal, so you can learn from your experience and plan ahead.

Keeping a record

If you've not been quite so up to date on keeping a financial record up to now, you can use your old bank statements to look at your transactions - have a look through for any large spends, as well as frequently visited retailers and make a note to either make the effort to reduce your spending here, or plan your budget accordingly.

A great way to ensure you can learn from your financial actions is to keep a diary. This doesn't have to be a full-on journal record of each individual spend, a simple spreadsheet or list will suffice.

Start by listing all your monthly spends, making sure you include your direct debits, standing orders as well as any cash withdrawals. From here, you can begin to group your spends into categories, working out how much you spend on food, fun and the necessities along the way.

Once you've organised your spending into categories, you can gain a clearer picture of where your money is going. This might help you make a decision on areas in which to cut back in from now on.

Planning ahead

It's always great to have a few things in the pipeline to look forward to, whether that's a few days out, an annual shopping spree or a summer holiday - once you've got your costs in order you can free up some space to start making plans.

However, it's a good idea to make a list of what you have coming up before you start to plan anything new. Simply being invited along to social events, busy weekends or short breaks can start to eat into your budget!

When planning your finances, have a think about the following:

Any upcoming events such as weddings, birthday celebrations or hen and stag weekends you may have to pay for. Always budget a little extra for celebrations, as the additional cost of a gift or new outfit to wear can add up.
Don’t forget about any once-a-year payments, such as your car's insurance, MOT and annual service.
Think about replacements - have you got any big appliances that you're likely to need to replace soon? From a new cooker to changing to a new mobile phone contract, make sure you're aware of when your more expensive belongings will need a renewal.

While it's important to plan for potential big expenditures that you may face, it's not all about the outgoings. When you're planning ahead it's good to think about the whole picture, so make a list of any incoming money too - particularly if your usual income is dependent on outside factors such as availability of work, if for example you work on a freelance or contractor basis.

It's worth creating a detailed picture of what you can financially expect in the future, but it's also important to be prepared if things don't work out as you expect - both from an unexpected costs angle, as well as a savings angle.

Secure your future

If you haven't already, setting up a savings account is a great way to take control of your finances. Not only are savings accounts essential for safeguarding you against any mishaps in the future, the reassuring feeling of having a little extra money tucked away can help you feel more relaxed on the whole.

First, you should work out what you can afford to set aside once you've taken into account your bills and other spending money. Even if you can only spare £20 or so a week, you'd be surprised at how quickly it all adds up.

Sometimes it can be difficult to save without a clear goal in mind, so set yourself mini milestones to stick to in your savings plan, incorporating a little reward from time to time.

Your savings are there to be dipped into when you really need them, to be used on worthwhile occasions, but setting up a savings account doesn't mean you need to be stingy with yourself either. You can still enjoy the odd treat when you're saving, but it's important to remember that it's all about living within your means.

For more handy tips and advice on getting your finances in order, make sure you take a look at the rest of the 118 118 Money blog. We've plenty of useful information on all aspects of making the most of your money, from travelling the world on a budget to avoiding online fraud - take a look to find out more.