10 tips to get your finances ship shape for 2019
Save more – set up a monthly savings plan for about 5%-10% of your earnings. If you have one already, increase your payments. Even small payments of £100 a month into a savings account have, thanks to the power of compounding, long-term growth potential
Simplify – consolidate and simplify your finances where you can (the numbers will be bigger and more meaningful), and this will put you in control.
Cut costs – Spend less than you earn! Get in the habit of looking at the charges for everything and review your monthly outgoings. See what you can cut out, and shop around for cheaper quotes on credit cards, car insurance and other service providers – you may be surprised how much you can save, especially if you create a monthly or annual total!
Have a plan – write your plan for the future on a single piece of paper, and estimate the cost. Make it a bold plan, if necessary, but state when you want to retire, on what income, as well as your current assets and expected liabilities. Setting it all down on paper really helps, as you can then ask yourself: does it make sense? If not, what changes will make it a better plan.
Stick to the plan – once you have established a good plan, make sure you carry it out. Promise yourself not to be blown off course by specific events or good/bad news, and don’t be tempted to tinker with it.
Pay off expensive debt – even in these days of low interest rates, credit cards and store cards are expensive. It makes sense to pay off the debt that charges the highest interest, but bear in mind that priority debts (those with the most serious consequences) need to be paid first. Personal loans from the bank are usually cheaper, while some firms offer 0% finance for a limited period. This may be a useful way to start paying off those large debts.
Be honest – do you really understand your investments? If you have money in wine, stamps, cryptocurrency, vintage cars or other ‘alternative’ forms of investment, do you really understand how they work? Are they worth it? Do they fit in with your overall investment plan? Be clear about their true worth to you, and consider whether your money in these alternatives might be better used to boost your pension fund.
Use your tax allowances – check to see if you have made the most of your Individual Savings Account, topped up your pension, or taken all your Capital Gains Tax allowances. If you haven’t, then your holidays are an opportunity to sort them out. Don’t leave it to the 5th of April, for your own peace of mind.
Spend it? Not everyone needs to save. Know when to stop spending, and when to give it away to loved ones or to charity.
If you have any doubts or questions about your finances, or you’re not sure where to start, consider talking to a financial adviser.