Increase Your Net Worth With Financial Spring Cleaning

Now that we are finally getting some sunshine and warmer weather, many of us are eagerly anticipating the summer months ahead.  With holidays, summer camps, barbeques, weekends outdoors and everything else summer has to offer, now is the perfect time to do some financial maintenance.  After all, you want your money working for you as hard as possible while you are enjoying the warm days ahead.  Below are my top  items to knock off your financial cleaning list!

Spring Cleaning for Your Financials

  1. Update your net worth file.  In my opinion, you should be doing this at least twice a year, though ideally you would do this on a quarterly basis.  Spring is the ideal time to do this.  You have already paid your tax in January, paid off your Xmas credit card bills and hopefully cashed in your bonus.  Now is the time to understand what your starting position is for the year ahead!
  2. Update your budget. A real no brainer here – you should be tracking all of your expenses on a monthly basis.  Have a look at how your spending has evolved over the past 12 months.  Be realistic about the areas where your spending has gone up due to inflation.  Be ruthless about cutting silly increases.  In particular, review your utility bills – this is where most of the stealth price increases are. 
  3. Review your stock market investments.  Another simple one.  Check all of your investment accounts to make sure you are not accumulating excessive cash balances.  If you are, use the cash to buy more stocks (even better, ETFs).  Try to avoid excessive fees though.  As a rule of thumb you can take your average trading comission and multiply it by 15.  If you have more cash sitting in your bank account than the number you come up with, buy more stocks. 
  4. Optimize your real estate investments. If you have an investment property, now is the time to check that all of your tenants are paying market rent.  If not, time to send in those rent increase forms (subject to your tenancy agreements and regulations).  If there’s a commercial property on site as well, check the lease to make sure you have enough time to renegotiate a renewal.  And if you feel bad raising rents, just remember – you are the one risking your capital here. 
  5. Check the interest on your cash accounts.  Banks have a nasty habit of reducing the interest rate on your accounts over time – and loyal customers are the first ones to get penalized.  I have recently moved a bunch of deposits from HSBC who pay 0.55% to Barclays who offer a 1.3% rate.  75 basis points adds up to some serious money for those with £50-£100k+ in their ISAs / deposits!
  6. Plan your big ticket purchases. I am notoriously bad at this and always end up spending more money than I need to.  Make a list of the big purchases you’ll need to make this year and be strategic about them.  Your holidays should be booked well in advance.  Your large ticket household items should be bought on sale.  Most importantly, never buy presents last minute as you will spend too much money for a suboptimal present.  Next time your wife / husband / boyfriend / girlfriend or anyone else drops a hint, jot it down in your phone and buy the present at least two weeks in advance.  Your wallet and your significant other will thank you – and you won’t feel like a total loser running around Selfridges at the last minute!
  7. Check your credit cards. I am not a big points person but this is worth doing once a year.  Ideally you shouldn’t have any card with an annual fee (with the possible exception of BA Black Amex).  Make sure you have one or two good reward cards and one good overseas card that offers a good exchange rate.  That’s all you need. 

Simple enough?  Then get on with it!  And once you are done, let me know of any other spring cleaning ideas in the commennts below!   

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