If you’re looking to clear your mind and take control of your money, check out 9 ways that autumn cleaning can help you declutter your finances to reduce debt
1. Understand your financial values
It might sound more like advice you’d find in a self-help book than a financial guide but understanding what matters to you can make it easier to declutter your finances. Putting aside your everyday essentials like your mortgage, debt repayments, and utility bills, think about the purchases and spending decisions that mean the most to you. Think of these as your financial values.
These spending choices will be personal to you but could include things like your annual escape to the sun, your luxury coffee on a rainy Monday, or your Friday night takeaway. When you know that these are the things you want to prioritise in your budget or add to your savings goals, it can be easier to let go of the things you don’t.
2. Declutter before organising
Don’t rush the process and start trying to organise your finances before decluttering. If you’re struggling to control your spending, falling behind with your debts, or finding it difficult to keep track of where you stand, trying to get organised before stripping out your unnecessary costs is just organising clutter. Take a step back and look for expenses you can cut before sitting down to make a new budget. The more streamlined your wants and needs are in the first place, the easier it’ll be to organise them.
3. Start with the small stuff
No matter whether you’re looking to fine tune your finances or are facing increasing levels of debt, decluttering your finances can feel almost impossible at first. Make it easier on yourself by starting with the small stuff first. Look for things that you can cut out of your budget that you’re unlikely to miss. That might be a TV subscription for a service you never watch, extra mobile phone data that you never use, or a free trial that you forgot to cancel. Tackle these before you start trying to make bigger changes.
4. Little and often
Autumn cleaning and decluttering your finances isn’t just an exercise you can do once and then forget about. Instead, it’s most effective when you find small ways to declutter every day and build positive financial habits over time. Make taking care of your money part of your daily routine; check your bank account, review your recent spending, and look for ways that you could improve. It isn’t about judging or punishing yourself, but about making a conscious effort to continually look for ways to save money and pay down your debts.
5. Find homes for your finances
Ever heard of the adage, ‘everything in its place’? Well, it rings just as true whether you’re organising your home or your finances. Decide where the money coming in from your monthly income should live so that every penny and pound has a home. Some of your pay will need to cover your essential costs, but the rest can be divided between your fun budget, your emergency fund, your pension pot, and your debt repayment fund. Once you know where everything belongs, you could start to put the money in its designated place automatically and stop your overspending in its tracks.
6. Automate almost everything
Setting up direct debits and automatic payments can quickly declutter the amount of space your finances take up in your mind. It can also help to reduce your debts as you’ll be less likely to miss a repayment if it’s automated, decreasing your risk of facing additional charges or defaults being added to your credit report. Automation can also improve your chances of meeting your financial goals. If you have a direct debt moving money straight to your savings the day after payday, for example, you might find that you’re less tempted to spend that money on something else.
7. Start a snowball
There are two popular ways that people try to tackle their debt: the snowball and the avalanche method. If you’re ready to start decluttering your debt, the snowball method could help you start to reduce the number of different payments you have to make each month. While the avalanche method starts with the debt with the highest interest rate, with the snowball, you’ll tackle your smallest debt first. Instead of just paying the minimum amount due, put any disposable income (money not paying for your essentials) towards eliminating this debt as quickly as possible. Once that debt has been closed, move on to the next highest, and so on.
8. Consider debt consolidation
There are several different debt management options available that could help you declutter your finances and reduce debt. A debt consolidation loan, for example, is the process of taking out a new loan and using that money to pay off all your existing debts so that you’re left with one monthly payment. Alternative options might include entering an Individual Voluntary Arrangement (IVA), which involves working with an Insolvency Practitioner, who will take on certain tasks for you, such as liaising with your creditors. Speaking to an independent debt advisor can help you understand your options and make the right decluttering decision for you.
9. Physically declutter
While Marie Kondo and similar home organisation experts might not be offering financial cleaning tips, following their lead, and decluttering your space could help you autumn clean your finances. Identifying the items in your home that you don’t use, that don’t spark joy, and that could earn you some extra money and selling them can help you generate more income and repay your debts faster. This could be a one-off or biannual clear out or the start of a new side hustle as you regularly resell things you no longer want or need.
Looking to declutter your finances to reduce debt? Our team of experts is here to help. Give us a call on 0161 8260 585 or send a message here
