Spring has sprung, and with the change in seasons comes a great excuse to get into the spring cleaning.
This could be literal, like cleaning and organizing our living and work spaces. Studies have linked home environments that are chaotic or messy and higher levels of the stress hormone cortisol. So, physical spring cleaning could actually result in more positive emotional health overall.
Or, it could be metaphorical, like refreshing and organising our finances. There have been multiple studies demonstrating a link between mental illness and financial problems, including that people in debt are three times more likely to have a mental health issue than those who are not.
So why not get going with a combination of both? I won’t try to give you any cleaning tips for your home! But below are three ways to give your finances a thorough scrubbing this spring.
1. Stem the damage of direct debits
Direct debits are a great way to automate your obligations and budget effectively. But the exact thing that makes them helpful – their set-and-forget nature – is the exact reason why sometimes they can be dangerous!
A spring cleaning tip to stem the tide of any leaking cash is to identify all your direct debits in your bank statements, and double check you’re not paying for anything you’re not actually using any more. These could be gym or other memberships you never cancelled, utility bills from past rental properties, or other automatic transactions you’ve stopped needing to pay, but have forgotten about.
Once you’ve cancelled any unnecessary direct debits, it can then also pay to analyse those direct debits you do still need to pay, to find out whether you could still be getting a better deal. If you can get cheaper quotes from other providers, your current provider might drop your bill, or you may save by switching to someone else.
Just sorting out your direct debits alone could add a few hundred in savings over the year. In fact, saving just $100 from using this trick would be worth $318 after twenty years compounding at 5% annually. Not bad for an hour or so of checking your statements and making a few quick phone calls!
2. Get clever with coverage
There is no point building wealth, if you could lose it all in a second should the unexpected occur. But that doesn’t mean you need to be covered for every single eventuality on the planet, or pay through the nose.
The first step here is to understand which insurances are right for you. These could include health insurance, life cover, income protection, business, and vehicle insurance. You may wish to invest in a tiny bit of research at this stage, as the insurance plans chosen in each of these categories might also vary according to your age and life priorities.
Once you know what you do need, you may then want to check whether your employer and/or your superannuation package is already protecting you, so you don’t double up. This could be one of the most economical ways to get covered.
You could then obtain multiple quotes from different insurance providers regarding whatever is left at this point. If you can find an agent that offers coverage in multiple areas, you may potentially be able to secure a bulk-buying discount.
Following these steps should give you peace of mind on two fronts: on the one hand, knowing that you wealth will be protected should the unexpected occur. On the other, knowing you’re still only paying for what you need!
3. Look out for “lost” money and rewards
You may be sitting on a whole bunch of unclaimed cash and rewards and not even know it.
Changed jobs and switched super providers along the way? Hundreds of thousands of dollars are lost each year by Australians who fail to consolidate their super, and leave cash sitting unclaimed in old accounts, accruing fees.
Have a handful of credit cards but no idea if you’ve earnt rewards or points? You may be sitting on a free trip to Fiji, and have no idea! Make those calls and send those emails.
Looked in your wallet recently to discover whether you have any redeemable gift cards? These usually have expiry dates, so are definitely worth keeping track of!
Checked whether you’re paying the lowest possible rates for utility bills, or receiving the highest possible return on your super? Switching costs are quickly becoming a thing of the past with online comparison sites, and sometimes it only takes a few quick phone calls to get the best deal.
There are often many simple changes we can make to scrub up our finances, so that they sparkle. So, why not use spring as your excuse?
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Katrina Haskew is Managing Director of Leading Advice (www.leadingadvice.com.au), a family-run financial advisory firm that helps its clients and their families build and protect their wealth, now and into the future.