Couple sitting down looking at finances

18 Mar 2024

Spring clean your finances

It isn’t just your home that can benefit from an annual deep clean. Here’s a checklist to get your finances in order too.  


On 20 March 2024, we’ll reach the official start of spring, the traditional time to de-clutter and deep clean our homes.

I also like to use this time to sit down with my husband and set our budget for the coming tax year. Whilst this is not the most romantic of dates, it means that in 15 years we have never argued about our finances. It also means that we can then have a chat about much more fun things, from where we’ll go on holiday to which new bike my husband will be buying.

If you’d like to do the same with your partner, here are the areas to look at.

Income and expenses

Firstly, will your monthly income will be affected by changes to UK taxation, e.g. personal allowance, national insurance, etc.? Knowing what your take-home pay will be makes it much simpler to budget.

Next, regular expenses: utility bills, council tax, and all the day-to-day costs of running a home. Are any of the direct debits unnecessary, e.g. magazine subscriptions that you no longer use, or the tiny amount that goes to Apple iCloud when you’re now using Google Cloud (and paying for both)? These all add up and leave you with less for things you really want.

Household bills

Are you still with a provider that offers you value for money for gas, electricity, broadband, etc. or is it time to change? Are you able to reduce the TV package, (for example, because the kids are watching TikTok instead of the children’s channels)?

Are you able to get a better deal on your mortgage? Are you comfortable with the level of debt you have outstanding, or do you need to make a plan to reduce it?

Savings

Is your rainy-day fund still sufficient? General recommendations are that you should aim to have 3- 6 months of expenditure in an accessible account so that you can still cover your bills if your regular income stops for any reason. Could you move your easy-access cash to an account that pays a higher rate of interest?

Where you’re earning taxable income on your cash accounts, does the amount need to be included on a tax return? Everyone has a personal savings allowance, and income above this amount becomes taxable:

  • Non and basic-rate taxpayers have £1,000
  • Higher-rate taxpayers have £500
  • Additional-rate taxpayers have £0.

If you and your partner are in different tax brackets, is it worth moving some of your joint savings into the lower earner’s name, to benefit from more savings overall?

Investments

Have you made full use of your ISA allowance (£20,000 each for you and your partner)? Where suitable to do so, have you made use of your capital gains annual exemption amount? This will be reducing from £6,000 to £3,000 on 6 April 2025, so now might be the right time to sell certain assets.

Are your portfolios still aligned with your objectives? That’s the jargon we use for “what do you actually want the money for”. Money is a tool that helps us to live the lifestyle that we want to. Very few people want to just get more wealth, there is usually a purpose behind it.

Pension

Have you contributed fully to your pension? Do you want to add more to it before the end of the tax year on 5 April?

Have you nominated a beneficiary? This is the person who will inherit your pension when you pass. Since pensions are normally outside of your estate, they won’t follow what’s written in your will.

Estate planning

Have you made a will? Does it reflect your current wishes? If you have recently married, note that this invalidates any previous will you have made.

One of the main benefits of marriage (from a purely financial standpoint) is that you’re able to pass assets between each other free of capital gains tax and you are able to inherit your spouse’s inheritance tax nil rate bands where they are unused. Not the best reason for a proposal, but certainly worth considering!

Are you wanting to make gifts to your loved ones? Are you making use of your £3,000 annual gifting allowance, or do you want to make larger gifts? Note that this may need more information around the rules of large gifts.

Power of attorney

Have you drafted a lasting power of attorney? This is a document to give someone the power to make decisions on your behalf concerning health and welfare, or property and financial affairs, should you lose capacity. Many people assume that being married means we are automatically entitled to know about our partner’s finances or to make decisions on their health care, but that isn’t the case without an LPA in place.

When to seek expert help

These can all be tricky conversations to have with your partner. And that is where financial planners come in, because tricky conversations are what we excel in.

We work with you to identify what are the most important things in your life; what you want to achieve, where you want to go, and who you want to spend time with. Because we are one step removed, we can look at your options in an objective manner and help you to focus on what you want to achieve the most.

If you’d like to find out more about financial planning and whether it could help you, get in touch now to schedule a free initial chat.

About the author

To contact or read more about Tanith Cheetham in Cheltenham, visit her bio here.

Investec Wealth & Investment (UK) is a trading name of Investec Wealth & Investment Limited which is a subsidiary of Rathbones Group Plc. Investec Wealth & Investment Limited is authorised and regulated by the Financial Conduct Authority and is registered in England. Registered No. 2122340. Registered Office: 30 Gresham Street. London. EC2V 7QN.