What’s your New Year Resolution? See our starter for seven that could see you financially healthier…
The work year has begun and memories of indulgent, relaxed days with family and friends seem to be far further in the past than just a few days ago. Already news and social media feeds are full of advice. Whether it’s about an alcohol-free ‘Dry’ January, a meat-free ‘Veganuary’ or some other new diet to help any overstretched waistbands, there’s a plethora of the practical being published. It all seems that January days became just a little more dark and dank – at least as far as I’m concerned if that were possible.
A new year, however, can also be the chance to take stock though of your life, which for me and my colleagues, also gives us the opportunity to review our clients, and indeed our own, finances. Some people even started during the holiday season itself. According to the HMRC, apparently more than 16,000 tax returns were submitted online to the taxman on Christmas Eve, Christmas Day and Boxing Day. What a vindication of Christmas television!
However, it’s not too late to get ahead of 2018 and make a promise to yourself that deep down you know will be of good. In fact, you could even compliment yourself that in taking the time, you’ll be able to make a commitment that you’ll be able to stick to throughout 2018. Our track record as a nation usually isn’t good as far as new year resolutions are concerned – only 3% of us Brits will actually keep any pledges for the full 12 months and the vast majority don’t even make it past ‘Fail Friday’ (the third Friday in January).
To help, at least with your finances, we’ve drawn up seven suggestions to help you join that select (and smug) group of the resolved:
- Deadlines and diaries
You still have until 31 January to file your online tax self-assessments, and at the same time you also have chance to check up on your state pension, tax allowances and credits and claim for tax refunds. Then you have until 5 April to make sure you have used up your tax allowances for the 2017/18 financial year. But there are bound to be other important dates too covering insurance renewals, company filings (if you’re a business owner)…the list could go on and on. My suggestion is to get these dates in the diary with a reminder a couple of weeks before to give yourself plenty of time to get organised before the deadlines loom.
- Put the paperwork in order
From any vintage share certificates to a pension pot from that first job, there could easily be a small savings pot or two that has been left unattended or even completely overlooked. Now’s precisely the time to see if you can cut the list of any financial providers and at least consolidate a few of the ISAs you’ve invested in over the years – you may even save a bit on some fees!
- Compute the cashflow
A couple of years ago, I calculated how much a small amount (such as foregoing that second coffee) can compound if saved regularly over a good period of time to quite the considerable sum. The beginning of the year is the perfect time to dig out a bank statement and count up all those direct debits. You could find you have a whole alphabet of subscriptions from Amazon Prime to Zumba classes that could now be cancelled.
- Removing the personal bias from portfolios
One of the things that has struck me time and time again is that clients often have a very personal approach to their finances. And as far as the organisation of these matters, that may make sense. But sometimes, the biases can lead to bad investment decisions – for instance, a good experience in the past with a particular stock or industry sector can lead to an unconscious choice to invest (more) despite what’s happening in the markets. We see clients holding on to ‘losers’ in the hope they recover from their nadir or invest more than they should in a sector just because it’s familiar to them, and so expose their wealth to unnecessary risks. We absolutely want you to take a personal interest in your investments, but it is not always the best approach to a diversified portfolio. For me, it’s about striking a balance between having some fun with shares, and weatherproofing your portfolio for the long term – something multi-asset investing can go a long way to achieve.
- Considering the kids?
You’ve tried to spoil the kids over the Christmas period, but you don’t want the money you’re setting aside for their futures to follow the same flight paths as the drones you’re learning to fly. You also don’t want to crush any ambitions by giving them too much too soon, so it’s worth thinking about saving into a pension for them. From university fees to house deposits, many of today’s offspring can easily put off setting anything aside into a pension until much later in life. So, as strange as it seems, perhaps you saving into a pension on your child’s behalf could turn out to be one of the best things you’ll ever do for them.
- Review your own pension
Successive governments have chipped away the lifetime and annual tax allowances for pensions and the Tories tinkered with them again in 2017, albeit away from the headlines of the Budget. And do you know what you have put away to date, and what more you can put away while avoiding a hefty tax bill in later life? Perhaps now is the time to get ahead.
- Have a plan
I still can’t get my head around why people don’t plan their finances. Recent 7IM research showed that seven in ten of us don’t even talk about money. Staying silent about something that so many have had no formal education on for me just doesn’t make sense. So please start a conversation with the family and better still with a professional. One of my favourite investment proverbs is that if you’re planning to invest, it’s important to invest in planning, and when better to start than the present!
Picking just one of these seven could see you so much better off. And just think how much better you’ll feel having committed to one of these – perhaps even as good as I may be feeling given the Ginuary (Gin in January) that I’m planning!
Before you go
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