According to Psychology Today, evidence suggests that removing clutter from your life can boost energy, reduce anxiety and improve focus. While many of these outcomes concern decluttering at home, the benefits it brings can also be transferred to your finances.
For example, removing clutter helps create a sense of confidence as it uses your decision-making and problem-solving skills. This is also likely to happen when you declutter your money, allowing you to feel more in control of your finances and better overall.
Furthermore, with rising inflation, ensuring you’re on top of your money is probably more important than ever. Unwittingly having money leave your account because you’d forgotten about an old automated payment could be particularly unwelcome as the cost of living soars.
With this in mind, read on to discover five effective ways you could declutter your finances.
1. Go paperless
Don’t keep paper statements unless you need to do so for tax reasons. Keeping them can take up a lot of space, could make information more difficult to find, and could be a security risk if ever your home is broken into.
Instead opt for paperless statements, or scan paper versions before storing them securely on your computer and destroying the hard copy. By ensuring that the information is stored in a logical, easy to find manner, you will be streamlining your systems and reducing clutter.
A good tip is to create separate folders for financial categories.
When disposing of outdated paperwork, always take care to destroy it properly as it will typically contain sensitive information. Always shred it and never throw it into the recycling or rubbish bin.
2. Automate your money
One way to reduce the number of financial tasks you have is to automate payments. Whether it’s to pay bills or send money to your savings accounts or investments, automating them means you will typically not have to do anything once you’ve set up the payment.
Furthermore, it reduces the chances of human error. This, for example, might stop you from spending money you thought you had but actually didn’t because you’d forgotten to pay a bill.
A shrewd move is to set up automated payments into an emergency fund. This could provide a financial safety net if life throws you a curve ball such as the boiler breaking down, or not being able to work due to illness.
3. Clean out your wallet
Get into the habit of checking through your purse or wallet regularly, and file away or destroy receipts that are loitering there.
Likewise, if you still have an old credit or debit card that’s now out of date, or a loyalty card you no longer use, destroy it. Having a wallet that is organised and allows you to find the cards you use regularly in a quick and easy way can help you feel more in control of your finances.
Doing this also makes it easier to regularly thumb through your wallet and think about when you last used your cards. This could help you to keep a mental note of expenditure, and how much money may be leaving your account soon.
4. Deal with financial tasks as soon as you can
Make sure you deal with statements and important information as soon as they arrive, and don’t let it build up to a pile of paperwork and junk mail. Taking immediate action helps ensure you know where you are financially at any moment, reduces your stress levels and means you won’t have to spend hours dealing with the paperwork in the future.
Dealing with financial tasks on a weekly basis could provide peace of mind, give you a sense of achievement and control, and help you spot suspicious activity on your accounts sooner.
5. Declutter, don’t reorganise
There is a difference between decluttering and organising, as the former means getting rid of unnecessary accounts or financial products. One way to do this could be to consolidate your accounts, creating fewer to keep on top of.
While organising means knowing where your accounts are, it may not mean reducing the number that you have, which in turn, could create stress as you try to keep track of them.
Ask yourself why you have the accounts you do, and whether they are really needed. With countless ways to track your money, such as the myriad apps that are available, it’s easy to fall into the trap of thinking you’re decluttering when in fact you’re filing problems away for another day.
Get in touch
As specialists in helping ex-pats in Europe, we could help you declutter your finances and make positive decisions around your wealth, pensions and retirement strategy. If you would like to discuss this further please email us at [email protected], we’d be happy to help.
This article is for information only. Please do not take action that is based on anything you read in this article until you have sought professional advice.