There’s potentially no better feeling than the sense of accomplishment knowing your affairs are in order and you’re ready to face anything the coming year throws at you. As such, you may use spring as an opportunity to clean your home.
Though, your house isn’t the only thing that deserves a good clean now and again – your finances could also use a thorough review.
So, from freshening up your budget to dusting down your portfolio, here are five interesting ways to “spring clean” your financial situation.
1. Review your mortgage deal
Since mortgage repayments are likely to be your most significant expense, it may be worth reviewing your current deal to ensure you’re getting the best value.
When your current deal ends, you’ll typically revert to your lender’s standard variable rate (SVR). This is usually an uncompetitive rate – Uswitch reports that, as of 25 April 2023, the average two-year fixed-rate 75% loan-to-value (LTV) mortgage rate was 5.35%. Meanwhile, the average SVR rate stood at 7.74%.
So, this could be the perfect time to see whether you could remortgage and move to a better deal. Even if your current deal doesn’t expire for some time, it may be worth checking whether better rates are available that you can switch to once your current deal ends.
If your deal doesn’t expire for some time and you’re happy to remain with it, now may be the time to set up a reminder to review your mortgage deal six months before it expires.
2. Maximise your ISA allowance at the start of the tax year rather than the end
As of the 2023/24 tax year, you can deposit up to £20,000 into one or several types of ISA. Instead of scrambling to max out your ISA allowance at the end of the tax year, it may be prudent to do this at the start of the new tax year instead.
This is because the longer you save or invest your money, the longer it will have to potentially grow.
Indeed, data from Nutmeg shows that if you contributed £6,000 to a medium-risk Stocks and Shares ISA on the first day of each tax year since 6 April 1999, you could have potentially accrued £8,387 more than if you’d waited until 5 April the following year – an additional 6% return.
Even if you can’t afford to maximise your ISA allowance immediately, it may be worth regularly depositing smaller amounts from the start of the tax year regardless.
The same source states that if you contributed £500 to a Stocks and Shares ISA each month since April 1999, you could have an additional £1,280 in returns compared to making a larger lump sum payment at the end of the tax year.
3. Update your budget and financial plan
While you should ideally be reviewing your budget and financial plan regularly anyway, this could be the perfect time to take an in-depth look and reassess your goals according to your current circumstances.
It may be prudent to comb through bank statements and check all your regular payments. You may be able to find ways to make savings, or identify any unhealthy spending habits.
It’s also worth reviewing your long-term saving goals and thinking of ways you can achieve them. Or, you could set short-term goals for the year ahead, such as paying off a debt by a specific date.
4. Review and update your will
Even if you already have a will, it’s important that you regularly review and update it so it reflects your current situation. This ensures that your assets will go to the people you intend, as you can dictate who gets what after you die, ensuring the financial security of your loved ones.
Reviewing your will is especially important if there’s been a change in your family, such as if you have a new partner or a new child or grandchild who you want to benefit from your wealth.
Perhaps the most significant benefit of updating your will is that it could help prevent disputes between your loved ones. They will likely be stressed and upset when you die so, if you don’t update your will, they could fall out while dividing your estate.
Better yet, you could potentially mitigate a sizeable Inheritance Tax bill with an up-to-date will. For example, if you leave your primary home to a direct lineal descendant, you can make full use of the additional residence nil-rate band and potentially substantially reduce the IHT liability of your estate.
5. Review your portfolio and savings accounts
When it comes to investing, as the old adage says: “it’s time in the market, not timing the market that counts”. This means that trying to buy when the market is low and sell when the market is high is notoriously difficult, and that a “buy and hold” approach is often a prudent one.
Regardless, it’s still worth reviewing your portfolio from time to time.
This could be the perfect time to ensure you have an adequately diversified portfolio that reflects your appetite for risk.
You could make this a yearly occurrence rather than checking it every day and worrying yourself about the performance of your investments.
On a similar note, it may be worth reviewing your savings accounts and ensuring you aren’t holding too much in cash. Even in an environment of rising interest rates, high inflation could erode the value of your cash savings in real terms.
If you don’t need access to the funds for five years or more, you could use your excess savings to invest in a Stocks and Shares ISA, or even shop around for new savings accounts to ensure you get the best rate available.
Perhaps the best way to ensure your portfolio reflects your appetite for risk is by speaking with an expert. Not only will they review your investments, but they can help you ensure you’re on track to meet your financial and life goals, lifting a considerable weight from your shoulders.
Get in touch
While we may not be able to help you spring clean your home, we can assist you in keeping on top of your financial situation.
Please email enquire@london-money.co.uk or call (0207) 808 4120 to find out how we could help you.
Please note
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.