Prepare for financial growth this year.
2020 was undoubtedly a difficult and challenging year for everyone. Many households and businesses are struggling to manage with the various repercussions of theCovid-19 pandemic, including reduced income, tight restrictions and entering another national lockdown.
This may seem like a daunting time to face up to your finances, especially following the festive period, but the turn of the new year is the ideal opportunity to make some changes and regain control of your financial future.
Even if your finances haven’t been affected by the pandemic – this last year has highlighted the importance of having savings funds to cover sudden changes in circumstances.
One of the first steps in becoming more financially stable is to assess exactly what you are spending and find where it’s possible to cut back and make savings.
The beauty of online banking is you can see a list of all your direct debits and standing orders in just a few clicks. You can then make a note of anything you don’t recognise or wish to cancel.
Once you have a clear idea of what you need each month to cover your outgoings, it’s easier to set aside money for savings or pension.
HMRC have recently issued warnings about scammers targeting those who will be submitting their self-assessment tax return. Using various methods such as text, email, and telephone calls, scammers are targeting taxpayers to tell them they are due a tax rebate or tax refund from HMRC.
The latest scam involves text messages alerting people that they may be able to claim a non-existent “COVID-19 government grant” as we head into the third UK lockdown.
If we have learnt anything from this last year, it’s the need for a rainy-day fund. Many people will have had to cope with fluctuations in income or no income at all (sometimes overnight). An emergency fund will help cover a financial shock or unexpected expense in the future.
A common goal is to save around six months worth of living expenses – however the more you can save the better. Remember, it may take a while to reach your goal, but even a small emergency fund is better than nothing.
Our mortgage payments are usually our biggest monthly expense. For those struggling to meet this commitment, the government has confirmed that the mortgage payment holiday has been extended. Borrowers who’ve not yet had a payment holiday will be able to request one up until 31 March 2021.
Those that have already requested a payment holiday will be able to ‘top-up’ to a total of six months of payment holidays.
Homeowners on a Standard Variable Rate (SVR) or those on deals coming to an end should review their mortgage to see if any savings can be made. Speak to a mortgage broker to see if there’s a suitable deal available.
When finances are tight, it’s understandable that paying into a pension may seem a bit of a luxury.
Before you decide to cut back there are a few things to consider. By paying into a pension now whilst you are working, you are preparing for the future when you retire. The longer you pay into a pension scheme, the more comfortable you will be when it’s time to finish working. If you are employed, it’s also worth considering that you will be missing out on the contribution your employer makes.
If you are self-employed and haven’t set up a pension fund, it’s crucial that you start making provisions for your retirement.
“Although it’s good news people are living longer, more than a third (35%) of women and a fifth (20%) of men over the age of 50 do not have a private pension. Worryingly 33% of over-50s don’t think they have enough money to provide them with a sufficient income for their retirement – with women more worried about not having enough money in later life than men.” – Pareto
No matter your age, growing older is a certainty. If you’d like to discuss your pension options and start planning for tomorrow, today, our experienced advisors are on hand to assist.
Most subscriptions or insurance policies will auto-renew unless you state otherwise (and sometimes at a higher price). This means you could end up overpaying for things such as home and car insurance.
Avoid price hikes by making notes of when your policies are due to renew and leave yourself enough time to shop around for the best deals.
We hope these tips help you manage your finances as we begin the new year. If you’re looking to reduce your spending or want to invest in your future, now could be the perfect opportunity to set yourself some new financial goals and create a wealthier 2021.
However, if you do find yourself in financial difficulties, government support options could be available to you. Take a look directly at GOV.UK.
If you’re ready to level up your finances, our expert advisors and Chartered Certified Accountants are on hand to help with proactive, professional advice. If you require any further information please contact us at email@example.com or phone us on 0161 359 4227.
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