Ten financial resolutions for 2018
- Review any debts
You should find out how much interest you’re paying on any debts you have. If you’re paying high interest rates, for example on credit cards, then see what steps you can take to reduce these charges and also consider moving your debts if you can get a better deal elsewhere.
Work out a plan to pay off your debts, starting with those where you are paying the highest rates of interest – and then make sure you stick to it.
- We all need cash savings
Everybody needs to have some cash savings. This will ensure that you have money available to cater for any short term emergencies or requirements and will avoid you having to go into debt if you need to access some money.
Review your existing cash savings to ensure that the interest rate you’re earning is competitive. Use comparison sites to see what rates are available.
If you’re looking to build up cash savings the best way is often to set up a direct debit to transfer a monthly amount from your current account to a savings accounts shortly after your payday.
- Pay off your mortgage
With interest rates at historic lows, this is a great opportunity for many people to reduce the amount they owe on their mortgage.
Review your existing mortgage deal to make sure it is competitive. Then work out if you can afford to make overpayments, either regular or single payments, to reduce your mortgage debt. If you do this now it could potentially save you thousands of pounds in interest charges over the long term.
- Join your company pension scheme
If you have access to a company pension scheme then you should probably join it. Find out what pension benefits your employer offers and also how much they will invest on your behalf
Look to see if you can increase how much you pay into your pension and also whether, if you do, your employer will increase what they pay in for you.
While retirement might seem like a long way off, the sooner you are saving regularly into a pension the easier it will be to achieve a comfortable standard of living when you do retire.
- Benefit from employee benefits
Many employers offer far more in terms of benefits than just a salary and access to a pension. Find out exactly what options are available through your employer.
For example, many employers provide life assurance for their employees, which in turn could mean that you need to arrange less of your own personal life assurance. It is also common for employers to offer tax efficient childcare vouchers or a range of other benefits at discounted prices.
- Check out the Lifetime ISA
If you’re aged between 18 and 40 and are saving to buy your first property, a number of groups are now offering the Lifetime ISA, which may be an option worth considering.
If you meet the criteria you will be able to save up to £4,000 each year and benefit from a government bonus of 25% of whatever you put in. You can then use your savings and bonuses, which are tax free, when you’re ready to buy your first property.
- Review your investments
Review your existing investments to make sure they are performing as you expect.
To ensure that you don’t end up taking too much, or too little, risk, you should look to rebalance your investment portfolio every six or twelve months.
This involves selling some of your investments which have performed well and now represent a larger proportion of your portfolio and reinvesting into those which have performed poorly and are now a smaller amount of your portfolio. This will help to get you back to your starting position and make sure you aren’t taking too much risk
- Don’t forget about investment charges
High charges can be a big drag on your investment performance.
Many investment funds charge too much and deliver too little. This is why more investors are choosing lower cost passive investments such as tracker funds and why the industry regulator, the Financial Conduct Authority, is looking closely at investment fund charges and transparency.
You should make sure that you understand the charges you are paying on your investment funds and also on any platforms that you’re using and then compare these with other products on the market.
- Protecting your family
Many people don’t pay enough attention to their protection needs. This could mean financial hardship for them or their families in the future if the worst was to happen.
Protection, such as life assurance, is particularly important if you have children or other family members who are dependent on you financially. As a starting point find out if your employer offers any protection benefits. There is no point in paying for extra cover if it is already being provided for you.
It is usually possible to get life assurance at a pretty low cost if you are in good heath.
Also, particularly if you have children or own any assets, make sure you have an up-to-date will
- Independent financial advice
You need to make sure that your personal finances are structured in the best way to help provide for you and your family, both now and in the future.
If you aren’t sure what you’re doing or if you need help on a specific issue, such as what to do with your pensions, then you should get independent financial advice.