Mid-year cleanup: Organise, control your finances

By Marianne Curphey

When the halfway point of the year rolls around, the last thing on your mind is likely that resolution you made in January to organise and take control of your finances. However, summer is a great time to give your finances a dusting-off so that, come next January, you won't be starting from scratch.

It may sound like a daunting task, but there are simple ways to keep track of your finances and change your money habits.

Prioritise before you start
When it comes to attacking financial clutter, it's important to strategise. Taking the time to alphabetise your files but forgetting to pay bills, for example, will cost you money.mid-year-financial-clean-up

"If you do have mountains of paper then it can be difficult to get started, but it is important to make sure that essential bills are paid," says Simonne Gnessen, of Wise Monkey Financial Coaching. If you forget to pay urgent bills, you could end up paying more, she says, giving the example of a parking fine doubling to £100 if you don't pay it in 14 days.

Enlist the help of your smartphone
There are now lots of great apps that can help you track spending, plan budgets, check your bank balances and scrutinise your card spending. When everything is digitalised, you know exactly what your balances are and there's no chance of throwing out that one bill, receipt or document you need. Of course, having all of your information on your phone means you'll need to take steps to secure your phone in the event it gets lost. You'll also need to back up all your information so that if you do lose or break the phone, you don't lose everything on it.

Try these apps to help you keep your finances in order:

  • For debt: Debt Manager, which helps you organise and track your debts and includes a repayment planner.
  • For account balances and tracking spending: Money Dashboard, which allows you to view the balances of all your bank accounts instantly and enables you to keep track of your spending so you know where your money is going. MoneyHub does this too, but also includes your investments. Finally, you can try Monefy if you simply want to track spending, and your bank's mobile app to check balances and make payments on certain bills.

You can also use your phone's stock apps to help you stay on top of finances. Leo Babauta, the author behind the Zen Habits blog, suggests programming reminders into your mobile phone to cultivate new good habits. This takes advantage of our habit of checking our phones regularly throughout the day. Calendar apps on smartphones are a great way to make sure you're paying bills and checking statements regularly. And if you need additional reminding, try putting a permanent reminder that you'll see the second you turn the phone on.

"It's simple and obvious," he stated on his blog. "Put a photo with a message on your phone's lock screen." If you are trying to sort out your finances, using a reminder like this could be the gentle prompt you need.

Take the decision out of your hands
Scientific research has suggested that willpower can be exhausted if you have to make too many decisions - known as "decision fatigue". Whether you are paying bills, making a payment to your credit card or trying to reduce your overdraft, you have a lot of financial decisions to make every month, such as: how much should I pay or when do I have time to sit and review my finances?

Automating some payments not only ensures that you won't forget, but also that you won't have to go through the process of deciding how much you can pay off each month.

"I believe in automating finances," says Babauta. "All my income is automatically deposited, all my bills are automatically paid, and my savings are automatically paid into."

The key here, according to Philip Pearson, independent financial adviser with P&P Invest, is to be realistic when you set it up. If you set up an automatic payment a hundred pounds over the minimum, when you don't have that much to spare, you'll end up in trouble. Don't be discouraged if you can only afford to set up the automated payment for the minimum.

"In terms of debt, paying off amounts little and often is more manageable and you'll still get good results," Pearson says. If you can afford an extra payment a few months out of the year, you can send those payments separately, in addition to the automated payment.

Make it a habit so you have less to tackle next time  
The trick to conquering financial chores regularly is tying them to habits that are already part of your routine, says Babauta. Say you want to track your spending. Babauta recommends tying the task of writing down your expenses to a "trigger that's already in your regular routine" -- checking your email, for example. In other words, every time you check your email, write down the purchases you've made so far that day.

"If you can consistently repeat this trigger-habit sequence over and over, the habit will form," Babauta says. Until it does, use positive reinforcement in the form of small rewards to help it along. And don't start in on another new habit until the first one has stuck.

"Money habits can be complicated," Babauta says. "There are many little habits we've formed over the years, and we need to replace the bad money habits with good ones, one at a time. Doing more than one at a time is very difficult and more likely to result in failure."

See related: 6 signs you need a summer financial reset, 5 resolutions for credit card holders

Updated: 12 June 2017