From quick fixes to big decisions, here’s how to kick off your year right financially.
1. Set small goals: It’s easy to get caught up in the big things we want to do with our money. Buying or renovating a house, retiring early, going on a once-in-a-lifetime holiday, these can all be helpful long-term goals, but they can also seem a long way off, and it’s easy to lose motivation while working towards them.
Try setting some manageable targets, with shorter time frames. It could be a goal to save a certain amount every month, or a list of tasks you need to do. Then make sure to check-in on how you’re doing at least once a month.
This can also be a good time to communicate with your partner or family about finances, and to take stock of your outgoings. Most importantly though, it gives you a chance to celebrate those little victories that will keep you motivated to keep going towards the bigger ones.
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2. Talk to your lender: The most important factor in maintaining a healthy credit score is repaying loans on time. If you are worried about making any payments such as your mortgage or credit card, you should get in touch with your lender as early as possible to discuss alternatives before that missed payment affects your score.
3. Make a will: You can pay a solicitor to do this, use an online service such as Farewill, or even do it yourself. Thanks to social distancing, it is now legal to have a will-signing witnessed remotely.
4. Start investing: Savings returns are, frankly, pitiful right now. All signs are therefore pointing towards putting money elsewhere for a return.
Investments give your money the best chance to grow over the long-term and have proven time and again that for five years or more they will outperform both cash returns and inflation.
The rule of thumb for investing is that you should be prepared to leave the money where it is for around five years, so don’t put all of your savings in shares if you might need them sooner. Keep an emergency fund on hand as well as any money you are saving towards a short-term goal.
5. Switch current account: After a pause during the first few months of the pandemic, many banks have now reinstated switching offers for customers looking for a new current account, making it a good time to shop around.
As well as cash incentives, many accounts now offer benefits such as insurance, cashback and even interest payments up to specific amounts.
6. Try fixed-term savings: It is a bad time for savers, and might even get worse if the banks reduces interest rates. Moving your money around might only yield miniscule results in terms of getting a better return, but if you really want to maximise every penny it’s worth looking.
One option for boosting returns is a fixed-term savings account. If working from home or being unable to go to restaurants and shops this year means you have ended up with more spare cash than you need for short-term goals and you can afford to lock them away for longer, there are some much better rates available.
7. Pay off debt first: Before considering putting extra money into savings or investments, pay off any debts. Low interest rates make now a good time to do so, as you won’t be missing out on much return for your savings.
8. Plan for next Christmas: It’s probably the last thing you want to think about, but there are huge advantages to working out what you will need next Christmas right now.
Shops will be slashing the prices on wrapping paper, crackers, Christmas cards and gift sets to clear their shelves, so snap up a bargain. It’s also worth keeping an eye out for presents, wine, and other knick-knacks throughout the year.
And don’t throw out those Christmas cards on the mantelpiece just yet! Cut out pictures from the front, then use a hole punch and a piece of ribbon to turn it into a cute gift tag ready for use next Christmas.
9. Get to know your pension: Pensions are an important part of your financial picture and it’s important to know how much you’re investing into your pot, where it’s invested and whether it’s enough to ensure a comfortable retirement.
“Make sure you get hold of the log-in details of your online pension portal and find out. Most of us will work for different companies throughout our careers and might have a few pension pots from former employers. Over time, it can be difficult to track these down. If needed, the online Pension Tracing Service can help.”
If you have several pots spread around, you could also consider consolidating them. Be careful though, as some pensions may have exit fees that cancel out any benefit you would get from moving them.
10. Review your subscriptions: Thanks to boredom and a plethora of enticing introductory deals, many of us will have signed up to new services this year. But are we still getting enough use out of them?
Most streaming services make it easy not just to cancel your membership but also to reactivate it, so don’t let the thought that you might need it again put you off. You could save a few quid a month by cancelling that Disney+ or Netflix subscription, but restart it for the Easter holidays.
11. Get better deals on bills: Pick up the phone and ring round all of your service providers to try and negotiate some better deals,. You can save hundreds of pounds over the course of the year if you do this.
It’s one of the first rules of keeping costs down, but how many of us actually do it as regularly as we should? Let’s make this the year we finally learn to haggle.
12. Find that child trust fund: There are three good reasons to find the account: to make sure your child can claim it when they come of age; to add more tax-free savings into it, and to consider whether to move it.
13. Have a digital clearout: If you find yourself frequently hankering after products you see online, try having a digital clearout.
Unfollow Instagram and Facebook accounts for brands, unsubscribe from promotional emails, mute notifications from shopping and delivery apps – do anything you can to take temptation out of your eyeline.
14. Reduce housing costs: Low interest rates make remortgaging an attractive possibility for home owners. Some areas of the country have also seen rental prices declining, especially in cities as remote working encourages an exodus to the countryside. If you are renting, check prices of similar properties in your area and ask your landlord for a reduction in line with the market.
15. Ask for help: Many of us are unsure about asking for help when it comes to our finances. Don’t shy away from it this year. You could ask family and friends, or use one of the numerous free resources online.”
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