Financial health is more relevant than ever, and checking up on it regularly is just as important. As we approach the sunnier days of spring, you might have just about recovered from the financial excesses of the festive period. It doesn’t matter who you are, Christmas always pushes your spending into overdrive, so now is the time to get things back to normal. So here’s how to get your finances in order in time for the summer holidays.
Lose the bad spending habits
If you’ve never really taken the time to sit back and look at your spending over the course of each month, there’s never a better time to do it than right now. Should you have made it until this point in life having not checked your more frivolous spending, you’ll be stunned by all the unnecessary purchases that are sapping money from your account virtually every day.
There’s a concept out there called ‘the latte factor’ that’s worth knowing about. The latte factor represents the small, regular and, most importantly, unnecessary spends that are weighing our personal finances down.
Take the title subject for example. Every morning on the way to work you might stop at your local coffee shop, pick up a coffee and carry on to the office. A £3 spend, but what of it? Well, multiply that £3 by the number of working days in the year and you have just shy of £800 spent on coffees alone. That’s £800 on a completely unnecessary luxury – and that’s just one item.
Take the latte factor thinking into your entire month, and you could see yourself save hundreds over the month, thus thousands over the year.
Sit down with your debts
Feeling bogged down by debt is a sure-fire way to make your life more stressful, and generally a whole lot tougher. With debts, particularly long-term ones, comes repayment responsibilities and growing interest fees. If you haven’t got these under control, you can find yourself in a rather vicious debt cycle that you definitely don’t want to be in.
Spring is a good time to take an in-depth look at your current outstanding debts and bills. You’ve just had a busy Christmas period, likely with a lot of spending involved, so it makes sense to see if you need to act on your finances.
Whether that’s re-budgeting to afford bigger repayments, looking at ways to boost your credit score or taking out a loan in order to deal with high interest, high priority debts, make sure you head into summer comfortable with what you currently owe.
Look to the future
Perhaps the new year came with a promotion and pay rise. Maybe you’ve been earning more than you spend for a while. If you’ve managed to get to a point where you’ve got a little money extra every month, you can start looking to how best to use it with the future in mind.
Your financial spring clean shouldn’t go without re-evaluating your budget and setting goals off the back of it. Tightening your spending will help you to achieve financial milestones, but there’s little motivation to stick to the plan without some attractive long-term goals in mind.
Your targets could be saving for a house or car deposit, beginning a wedding fund, or even saving up for a cool purchase you’ve wanted to make for a long time. Whatever it is, understanding your longer-term financial aspirations will help you define your budget in the immediate.
Spring clean your finances over the next month and you can head into the summer holidays ready to enjoy yourself.