2017 – Bronny’s Financial Resolutions
2017 is upon us, so I thought i’d put together a little list of financial resolutions you could make in order to save yourselves a bit of cash here and there. Take a look!
Look at the Lifetime ISA aka ‘Lisa’
People between the ages of 18 and 40 who wants to invest in their retirement or save for their future home should look at the Lifetime ISA, which launches in April. You could save up to £4,000 tax-free a year and get a government bonus of 25 per cent (a maximum of £1,000) until you reach 50.
Consider increasing your mortgage payments
With interest rates at historic lows it could be a good opportunity to reduce the amount that you owe on your mortgage. Work out whether you can afford to make overpayments — it could save you thousands of pounds in interest charges over the long term.
Review your debts
Devise a plan to pay off your debts and make sure you stick to it. Patrick Connolly, of Chase de Vere, the independent financial adviser, says: “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.”
Be a savvy saver
Take a look at your monthly budget (draw one up if you have not already done so) and check that your savings goals are realistic. Start by looking at your necessary expenses, such as food and other bills, and go from there. An overview of your outgoings will help you to assess where you can make cutbacks and how much more you can save.
You should set aside a certain amount of money each month in case of an emergency or unexpected change in circumstances.
Do not let your savings languish in an account with an uncompetitive rate. Other simple ways to boost your cash reserves include taking advantage of discount codes available through online retailers and using cashback sites such as Quidco and Topcashback.
“Detox” your investments
Are all your investments performing as you would expect? Jason Hollands, the managing director of Tilney Bestinvest, the wealth manager, says: “Existing portfolios drift over time as different investments held don’t all move in tandem, which can lead to the risk profile of a portfolio mutating into something very different from what was intended. It is vital to review your portfolio and potentially give it the equivalent of a detox at least once a year.”
However, do not be too easily enticed by “whatever funds are flavour of the month”, Mr Hollands says. Consider first how they would fit alongside your existing portfolio and assess your risk appetite.
Check your energy tariff
You could make a considerable saving by switching your energy deal. The 6.3 million people on British Gas’s standard variable tariffs, for instance, would save £129 a year if they moved to the company’s cheapest tariff. Examine the market and make sure that you are not losing out. Visit sites such as Energyhelpline, uSwitch and TheEnergyShop to compare the different deals available.
Take charge of your pension
The sooner that you are saving into a pension the more likely you are to have a comfortable standard of living in retirement. Consider paying into a personal pension plan as well as your workplace scheme. Maximise your contributions while you can, particularly if you benefit from higher-rate tax relief.
Make and update your will
Unsurprisingly most people prefer not to dwell on their mortality. When it comes to your personal finances, though, it does require some thought from time to time. Putting off making or updating a will can have terrible consequences for your loved ones and dependants.
If you have not made one, it is not as complex or as expensive as you might think. A single will drawn up by a solicitor costs between £100 and £200, depending on which part of the UK you are in. If you have one, then ensure it is up to date (received wisdom says that you should review it every three to five years).
Watch out for auto-renewal
Often your insurance policy will automatically be renewed at the end of the year unless you tell your insurance provider that you do not want to continue with it. Dominic Baliszewski, the director of consumer strategy at Momentum UK, the financial services website, says: “Insurance companies usually increase prices in the second year to recoup the cost of discounts offered from the first year. Compare deals and consider switching every year to be sure you’re paying the best possible price.” Websites such as Comparethemarket.com and Moneysupermarket.com are the places to start.
The good news is that, thanks to government legislation, insurance companies will from April no longer be able to quote a premium for the renewal of your policy without disclosing what you paid for the previous year’s premium.
Talk to a financial adviser
Free online services can provide basic guidance but if you need help with a specific issue, such as combining several pension pots or investing an inheritance, it is wise to go to an independent financial adviser. They will analyse your situation in detail and give you clear recommendations.
According to a study by Unbiased.co.uk, which helps people to find advisers, those planning their retirement with an adviser had an average of £48,279 more in their pot than those on the same income who did not seek professional help. So unless you are confident about your financial strategy, then paying for advice, particularly if large sums of money are at stake, will be worth it
There we have it! 10 Financial resolutions. Are you going to use these to help yourselves through 2017?
– Bronny
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