A New Year… A New You: Get your finances straight

After a wonderfully indulgent Christmas, the New Year is the perfect opportunity to get your finances in order.

1. Have a spring clean: Review your finances

Finances should be regularly reviewed to ensure that you are getting the best return from your money. Take a look at what debts you have, what savings or investments you have and what pension schemes you belong to. Always make sure you are taking full advantage of any tax free savings that are available and don’t be afraid to change bank or credit provider to get a better deal.

2. Always have an emergency buffer fund

Before going crazy in the January sales calculate what monthly income you need and start building a buffer. Clearing debt is always a good idea however if the worst happened a buffer can be more beneficial if you have significant debt. Creating a buffer of roughly four months your outgoings protects you from missed payments and repossessions and allow you time to get back on your feet.

3. Save Save Save

Putting a small sum aside every month can have a large return long term. Planning to save whatever you don’t need to spend from your monthly wages rarely happens, but by putting a set amount each month away it almost becomes an accepted set expense rather than an option.

4. Invest

Shares can be a risky investment but in an economic environment where interest rates couldn’t get lower, returns on share investments can be at an astronomical percentage. Share investment is not a get rich quick scheme but where your £500 in the bank may only be earning 2% interest, shares can have returns of 20% – you may not become a millionaire but you could earn a little treat for your self. Some companies even pay out to their shareholders each year, this is a percentage of the profit made that year.

5. Review your pension and health schemes

Most working people dream of their retirement and it is essential to start planning your retirement financial security as early as possible. You should review your contribution levels each year and consider the tax implications of contributions now and in the long term.

If you are struggling with debt, create a budget and repayment plan that focuses on reducing your spending and debt balances over a 12 month period so that next year you can celebrate without financial worries.

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