Clean up your finances

Simplify your spending

Sit down with your latest bank statement and go through every item of expenditure, including all your Direct Debits and standing orders, and cancel those which are no longer relevant. For example, you may find you are paying for clubs or gyms that you no longer attend, or that you have magazine or club subscriptions that you could do without.

Similarly, if you have credit cards you no longer use, cut them up to avoid temptation in future and cancel the Direct Debit you have set up for these accounts. Only having essential Direct Debits in place will make much easier to monitor your spending, so you know exactly where your money is going each month.

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Loyalty rarely pays

Could you earn more on your savings by moving your money to a different account, or save money by switching broadband providers?
Similarly, if you have insurance policies which are due for renewal, don’t automatically accept the quote offered by your existing insurer.

Instead, compare quotes from other providers and see if you can cut costs by buying cover from an alternative company.
If you have a packaged bank account which you are paying a monthly fee for, make sure you are using all the benefits on offer. If you don’t, switch to a free account. This could save you £180 a year, based on a typical monthly packaged account fee of £15.

Review your mortgage

Remortgaging potentially could save you hundreds, if not thousands, of pounds a year, especially if you’re currently languishing on your lender’s standard variable rate (SVR).

For example, a £200,000 repayment mortgage with 15 years left to run would cost you £1,541 a month if you were on the typical 4.61% SVR. However, if you remortgaged to a competitive two-year fixed rate deal at 1.93%, your monthly payments would fall to £1,281, saving you £260 a month or £3,120 over the year.

Pay down your debts

Try to clear as many of your outstanding debts as possible, focusing on the ones that charge the highest rates of interest first. Look at ways you might be able to reduce the amount of interest you are paying too.

For example, if you have credit card debts, move them onto a balance transfer credit card offering a lengthy 0% introductory period so that your monthly payments go towards paying off what you owe rather than being swallowed up by interest charges.

Current best buy balance transfer cards include HSBC’s card which has a 0% introductory rate for 33 months and M&S Bank’s balance transfer card which is interest-free for the first 31 months. There’s a 2.7% transfer fee on the amount you transfer onto the HSBC card, whilst the M&S Bank card has a lower 1.99% fee. Make sure you pay off what you owe during the introductory period, as interest rates on both these cards go up to 21.9% when they finish.

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