Spring cleaning your finances and understand your wealth

Brighter evenings and warmer weather have signalled the start of Spring. Whilst you may set some time aside to spring clean your house, it can also be a great opportunity to Spring clean your finances. Spring cleaning your finances can help you to understand your wealth and ensure all your finances are kept in order.

Here are a few tips when it comes to your financial Spring clean:

Make sure your records are up to date

This includes going through all the paperwork which has accumulated relating to things such as savings, investments, life assurance, pensions and bills. This will help you to cut down on the clutter and categorise any documents which you need to keep. It may help to keep a digital spreadsheet recording all the assets that make up your wealth.

Think about your financial goals

Most people will have financial goals in some form or another. Whether this is ensuring you have enough money for retirement, making sure you have enough money for school fees or even saving up for that holiday (when we can go on holiday again of course!). It is important that you regularly take the time to consider your goals to make sure you are on track or whether you need to make any adjustments to achieve them.

Thinking about and understanding how to realise your goals can be a daunting prospect. The financial planners at Birkett Long IFA LLP can offer support and guidance to help you achieve the best possible outcome.

Review your income and expenditure

Having an awareness of your income and expenditure will help you to understand how much excess income you have for things that you want or to put towards savings. After reviewing your expenditure, you may notice that there are things that can be altered to save unnecessary expenditure. For example, you may have a regular subscription that you pay for and of which you don’t make use.

This is also a good opportunity to review your existing liabilities such as mortgage or credit card balances.  

Make sure your cash is working hard for you

Many people will hold a portion of their wealth in cash-based savings such as bank or building society accounts. Most interest rates currently on offer are poor, but that does not mean that better rates aren’t out there. If you have held an account for a while it is likely that you could obtain a better interest rate by moving to a different type of account or a different provider. Taking the time to research alternative rates could prove beneficial.

Whilst reviewing your cash holdings it is also sensible to ensure you have a sufficient sum of money as readily accessible cash in the event of an emergency. If you do, you may wish to consider longer-term investing in other types of investment.

Review any existing life assurance & protection arrangements

Your need for life assurance often changes over the course of your life. Typically, life events such as getting married, moving home, or having children usually prompt people to consider life cover. Regularly reviewing your life assurance needs will help you to establish whether you have appropriate cover for your circumstances or whether there is a requirement to put in place or remove cover where appropriate.

Also, consider what would happen if you could not work through an accident or illness, would you be able to continue to pay your bills? You may need to consider income protection arrangements to protect you and your family. 

Assess your investments and pensions

Taking time to assess your investment arrangements will assist in ensuring they are fit for purpose and match your needs, objectives and circumstances. Are you trying to build up your investments and pensions for retirement planning? Or are you looking to generate growth or income? It may be appropriate to review your arrangements depending on the circumstances.

As things change in your life so should your investments, to reflect those changes. For example, if you are approaching retirement and looking to commence an income from your investments and pensions, it may be prudent to consider reducing the level of risk adopted for those investments.   

This is also a great opportunity to consider utilising any annual allowances or exemptions to ensure you are targeting maximum tax efficiency for your holdings. For example, have you utilised your Individual Savings Account (ISA) allowance, Annual Pension allowance or Capital Gains Tax (CGT) allowance?

By taking the time to review your finances you can gain a stronger understanding of your financial position, which in turn can help you to plan and achieve your objectives. Life brings about many changes that will impact these objectives and will change your circumstances. This highlights why it is hugely important to keep tabs on your finances.

Birkett Long IFA LLP can offer advice on investments, pensions and protection to assist with planning and realising your financial goals. If you require guidance or would like to discuss your financial arrangements in detail, please do not hesitate to contact Birkett Long IFA LLP.

This article is for information only and should not be seen as advice or a recommendation to take action. Investments can go down as well as up and you may not get back the original capital invested.