With many of us returning to work today there is much talk of starting 2016 off in a healthy way, making sure we eat well, drink less alcohol and more water, and exercise more. It’s a great idea to apply these principles to our finances too, so here are 7 ideas for a healthy financial start to 2016:
- Get organized! Get on top of your files, paperwork and plans and make a simple and clear summary of what you own, owe, receive and spend.
- Understand what you are spending. It doesn’t matter how much you earn, if you spend too much, then you will never be financially secure. If you never seem to be able to regularly save a meaningful amount, or you are racking up debt, then chances are you don’t know exactly how much you are spending and on what. Try and get to grips with what is actually going on in your accounts.
- Manage your debt carefully. Although interest rates are abnormally low at present, it’s unlikely that they will stay that way forever. Even so, some types of debt, such as credit/store cards and higher cost loans, charge high interest. Debt repayment represents a risk-free, tax-free return equal to the interest you will avoid.
- Check your mortgage interest rate. Again, interest rates are unlikely to remain at their current levels forever, so if you are on a variable rate, or approaching the end of a fixed or discounted rate on your mortgage, this is a good time to consider your options and make sure you are getting the best rate possible for your circumstances.
- Create an Emergency Fund. As a rule of thumb, your emergency fund should include enough to cover 6-12 months of household expenses.
- Review your protection policies. Many people build up protection policies over the years that can become out of kilter with their situation several years down the line. In addition, protection companies compete to make sure they have the ‘best’ definitions of illnesses etc, and by reviewing your policies, you will make sure your protection is right for your needs now, and it is up to date in today’s world. With the equalisation of premiums which happened a few years ago, it is quite possible that you may also be able to save yourself some money too.
- Look for tax advantaged ways to save and use all relevant and appropriate allowances before they disappear. Think about ISAs, Pensions, VCTs, EISs and AIM portfolios. Do you use these? Do you use them well? Are you using them as best you can? Do you understand your allowances and how by working smarter you can make your money work harder?
By applying your mind to your finances in the same way as we are all applying our minds to our health and lifestyle, you can make sure that you have a healthy financial start to 2016, and if you need the help of an expert, you know where we are!
