Not only is Ssring the time of year when we look forward to warmer days and lighter evenings, but it is also when we traditionally have a good clean and clear out. Just like your home, your finances could also benefit from a good tidy-up every once in a while. NMTBP gives you some tips to help you get started on spring cleaning your finances

Review your budget

When reorganising, it’s usually best to start by taking a closer look at what you’re dealing with before making any drastic changes. Reviewing your monthly finances can help you determine which areas need the most attention. Taking a careful look at your regular outgoings can show if you’re overspending in certain areas or help you to see where savings could be made. With a clearer picture of your finances, you can take another look at your budget and think about setting spending limits to help you work towards your goals

Organise your financial documents

Gather all your financial documents – bank statements, investment statements, bills, insurance policies, and tax documents – and organise them systematically. File away important paperwork and shred any unnecessary documents to reduce clutter. Setting up a digital filing system can also streamline this process and make it easier to access your documents when needed

Assess Your Debts

Take stock of your debts, including credit card balances, loans, and mortgages. Make a list of each debt along with its interest rate, minimum payment, and outstanding balance. Prioritise paying off high-interest debts first while making timely payments on all your obligations. Consider consolidating or refinancing your debts to lower interest rates and simplify your repayment process

Organise your savings

Savings rates are the highest they’ve been for years, so it’s a good time to shop around and consider switching to take advantage of the best savings rates. Don’t forget that some rates are fixed for a certain period. It’s a good idea to note when the fixed rate is due to end so you can review the rates and consider what’s right for your circumstances

Many banks also offer the option to automate your savings through online banking or their app, so you can save without thinking about it each month. Choosing an account with a ‘round-up’ feature could also help you save small amounts regularly.

Optimise your investments

Review your investment portfolio to ensure it remains aligned with your risk tolerance and investment objectives. That’s the jargon we use for “what do you actually want the money for”. Money is a tool that helps us to live the lifestyle that we want. Very few people want to get more wealth; there’s usually a purpose behind it. Consider rebalancing your portfolio to maintain the desired asset allocation and diversification. Look for opportunities to optimise your investments by minimising fees, maximising tax efficiency, and taking advantage of employer-sponsored retirement plans and tax-advantaged accounts

Have you used your ISA allowance (£20,000 each for you and your partner)? Where suitable to do so, have you used your capital gains annual exemption amount? This will be reduced from £6,000 to £3,000 on 6 April 2025, so now might be the right time to sell certain assets

Optimise your pension

In the 2024 Spring Budget, the Chancellor announced another reduction in National Insurance (NI) contributions. In fact, NI has been reduced by 4% in total since the end of 2023. This means someone earning an ‘average’ salary of £35,400 is on track to be £900 better off this year.

If you’re in a position to invest even a portion of this extra money, it could really help you to build up your pension pot over time. And don’t forget, the payments you make into your pension plan could benefit from at least 20% tax relief (or you might get tax benefits in a different way). You might even benefit from extra employer contributions, too (if they offer to match your payments)

If you’re happy to stick with your current pension payments, there are still some other things you can do to make the most of your pension

If you’ve changed jobs in the past decade, you could have some forgotten pension pots which were automatically set up for you by past employers. If you have pensions with several providers, bringing them together could make them easier to manage

Bringing pensions together won’t be right for everyone. You could lose money by giving up any guarantees or benefits you might get from other pension plans

Plan for the future

Have you made a will? Does it reflect your current wishes? If you have recently married, note that this invalidates any previous will you have made. One of the main benefits of marriage (from a purely financial standpoint) is that you can pass assets between each other free of capital gains tax, and you can inherit your spouse’s inheritance tax nil rate bands where they are unused. It’s not the best reason for a proposal, but it’s certainly worth considering!

Are you wanting to make gifts to your loved ones? Are you using your £3,000 annual gifting allowance, or do you want to make larger gifts? Note that this may need more information about the rules of large gifts

Have you drafted a lasting power of attorney? This is a document to give someone the power to make decisions on your behalf concerning health and welfare or property and financial affairs, should you lose capacity. Many people assume that being married means we are automatically entitled to know about our partner’s finances or to make decisions on their health care, but that isn’t the case without an LPA in place

By taking the time to spring clean your finances, you can declutter your financial life, streamline your financial processes, and set yourself up for success in achieving your goals. Whether trimming unnecessary expenses, paying down debt, or optimising your investments, every step you take towards financial cleanliness brings you closer to financial freedom and security. So roll up your sleeves, grab a cup of coffee, and get ready to breathe new life into your finances this spring