Spring clean your finances: 7 tips to help get your savings in order

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From setting goals to making the most of your tax-free allowances, here’s how giving your finances a spring clean could have long-lasting benefits.

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With inflation rising and the cost of living increasing, it can be hard to focus on saving more. But taking some simple steps to get on top of your budget and declutter your finances for the year ahead could help to give you some peace of mind when it comes to your savings and your future. Here are our top tips to get you started. 

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1. Set your goals

The first step of making any financial plan is to work out what your goals are. In other words - what are you saving for? 

As you start to notice the effects of increased prices, you might find that your current goals could take you longer to reach than you’d originally planned, or they might need to be adjusted slightly. So it could be a prime time to revisit them now and consider if your plans need to change. 

When setting savings goals, make sure they’re specific and realistic. Instead of ‘I will save more’, try ‘I will save £5000 by the end of the year to put towards a house deposit’. Once you know exactly what you want to achieve, it makes it easier to understand what you need to do to achieve it.

If you have any debts, setting a goal to clear them might be a good starting point. Then you can focus on saving up for some longer-term goals. MoneyHelper has some useful information on dealing with debt if you need help getting started.

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2. Get your budget in order

Now that you’ve set your goals, it’s time to work out how you’re going to reach them.

Take a cold, hard look at your budget – or even get an impartial view from a friend or loved one if you feel comfortable doing that. It’s a good opportunity to highlight any bad spending habits you might have formed over the last couple of years.

You need to have a good overview of what’s coming into your bank account and what’s going out. You might find you could do with a direct debit detox. Many of us rack up memberships and subscriptions that we could probably live without. If it helps you reach your goals, consider cancelling them or shopping around for a better deal. You might be surprised at how much money you could save. 

If you haven’t set a budget before - try this budget planner tool.

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3. Are you putting your money in the right place?

Depending on what your goals are, you might find there are different benefits you could get depending on how you save your money. 

For example, Individual Savings Accounts (ISAs) are a great, tax-efficient way to save for big goals like weddings, a new car and even rainy day funds, without having to tie up your money long term. 

If you’re saving up for your first home you might find a Lifetime ISA is a good way to give your savings an extra boost. You can get a 25% government bonus added on to up to £4,000 of your savings every tax year if you meet certain criteria.

Any long-term goals (five years or more), like retirement or education fees for your children or grandchildren, could benefit from investing. Investing gives your money the opportunity to grow over time, so it’s worth considering saving into a Stocks & Shares ISA or your pension plan for these kinds of goals. If you’re trying to decide between a pension plan and an ISA, try our comparison guide.

Remember the value of investments can go down as well as up and you may get back less than was paid in. You can't normally access pension savings until age 55 (age 57 from 2028).

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4. New tax year, new start

The start of a new tax year brings new annual allowances. So, when you’re setting up your budget, make sure you factor in making the most of them and maximising your tax benefits for the 2022/23 tax year.

Depending on the type of ISA you have, you can save up to £20,000 in a tax year across all of your ISAs and you won’t pay any tax on any interest you earn. Some types of ISA have lower limits though, so do check.

The current rules let you pay up to 100% of your salary, or £3,600 a year into your pension, whichever is higher, and still get tax relief. There’s also the annual allowance to consider, which is currently £40,000, but might be less if you’re a high or non-earner, or have already started taking money out of your pension savings. If you pay more than the annual allowance into your pension in any one tax year, you’ll be hit with a tax charge.

If you’re lucky enough to get a bonus this year, putting some or all of it into your pension plan could help you boost your pension savings. It could also save you paying higher rates of tax and reduce the national insurance you have to pay, meaning you get to keep more of your income in the long run. Read our article on bonus sacrifice to find out more.

Your own personal circumstances, including where you live in the UK, will have an impact on the tax you pay. Laws and tax rules may change in the future.

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5. Check on your pension plan

Your pension savings will likely make up a good chunk of your overall life savings, so it’s important you check the value of your plan on a regular basis.

You can log in or register online to review your Standard Life pension. Or why not try our mobile app to make it easier to review your plan on the go?

You can also check to see how much you might be on track to have in the future by using our pension calculator. 

If you’re not quite where you want to be and you’ve managed to save a little extra thanks to your new budget, why not consider putting it towards your future by paying it into your pension plan? A little can go a long way when you’re saving for the long term.

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6. Regularly review your investments

Regularly checking to make sure your investments are doing what you’d expect and still meet your needs is an important step. That includes your pension plan, Stocks & Shares ISA and any other investments you might have.

The investments you choose should match your financial goals, and your goals are likely to change throughout your life, so it’s normal if your investment choices change too.

If you’re feeling concerned about recent ups and downs in the markets – try to keep calm. Our recent article tells you what to consider when your investments are impacted by market volatility.

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7. Think about bringing everything together

Lastly, consider if combining your pension plans is right for you. It’s likely you’ll have a number of jobs throughout your lifetime and, thanks to auto-enrolment, each of your employers will give you a workplace pension and pay into it. But that could add up to quite a few pension plans in your lifetime – which means a number of different charges and a lot of plans to keep track of. 

Some people might find it simpler and cheaper to bring everything together into one pot which can be easier to manage. Read our article to find out more about consolidating your pensions.

You can find more information on transferring a pension to Standard Life on our website.

Combining pension plans will not be right for everyone. You need to consider all the facts and decide if it’s right for you as you could lose valuable benefits and guarantees. 

The information here is based on our understanding in April 2022 and shouldn’t be taken as financial advice. If you are unsure, you should speak to a financial adviser and there is likely to be a charge for advice.

The value of investments can go down as well as up and could be worth less than what was paid in.

Standard Life accepts no responsibility for information on external websites. These are required for general information.