Money Planning - Money Makeover after Christmas
(Updated January 2018)
The tinsel and turkey is gone, ‘auld lang syne’ has been sung and the debris of Christmas and New Year festivities recycled. Even the 'Boxing Day' sales (whatever happened to them?) started in November and we are all waiting to get paid this January. January can be long month for many.
The only thing to complete our start to 2018 is of course those bank statements and credit card bills will start to arrive soon (or get online today and take a look).
January is traditionally a ‘lean month’ for many and given that we may spend a few dark evenings in until payday, we always recommend clients revisit and overhaul their finances in general in January. By “servicing” your money, it will put you in good stead for the rest of the year.
How to Plan for January and Febuary ….
Go through bank statements and shopping receipts. Make a simple list of everything that you spent and where. Put them into categories of essentials and luxury and assess whether the money spent on any item could be better spent elsewhere. You will be surprised what is on your list and where your money actually goes.
- Consider setting up three accounts. A ‘bills account’, a ‘luxury’ account and a ‘savings’ account. If you only have one account, each time you go the ‘whole in the wall’ there is always money there that you spend. By establishing how much you spend on each area and controlling it, you will start to see savings build.
- Food – reassess your food bills. Could you buy it cheaper? Food prices WILL rise again in 2018. Are those ‘two for one’ offers really that good? We have a saying: “you can only con a greedy person” and that is what some of these offers appeal to. Read the offers, check them out and use them, but only buy items that are on those offers, if the rest of your grocery list is cheaper elsewhere, then go elsewhere. Are those new 'Best Before Date' stores worth a look? Search online for Best Before Date Shops - you may be surpised at how cheap goods are, particularly if there are certain items that you consume quickly or 'en masse'.
- Heating Bills – Fuel prices are going up. Go online and compare costs by using utility switching services you will probably find a cheaper deal. Whilst wet and windy, it is a milder winter so far, turn your thermostat down just a couple of degrees, this may save you hundreds of pounds over the years and you won’t feel the difference.
- Petrol – fuel prices are heading back up again in 2018. Make a mental note to write down the cheapest fuel station prices as you drive buy. Do not just keep going to the same service station you usually do. Filling the tank is expensive and if you can save a few pounds each time by shopping around this mounts up.
- Mortgage – lending costs and interest rates are expected to rise in 2018. The cost of wholesale borrowing for mortgage companies (10 year bonds) is increasing as well as increasing interest rates and this will be passed on to us as consumers. Are you still on a low tracker rate? Has your fixed rate ended? Don’t leave your mortgage until it is too late to lock into a cheap deal. Try and pay more off your mortgage each month. Even just £10 or £20 pm more is better than nothing.
- Insurances – There are usually cheaper life insurance, house insurance and motor insurance out there. Get some quotes.
- Credit Cards – if you do have card debt, do not just leave it on the same card. At the end of special offer or interest free balance transfer periods, credit card company interest rates increase to as much as four to five times your mortgage rate. Get your card bills out, consider paying them off from low interest bearing savings accounts now or switch to another nil balance transfer.
- Rail Fairs - are up, can you walk or cycle to work? Not all of us can but did you know there is a tax break if you cycle to work? Fitter body = fitter finances.
- Sensible Finances - Looking After Loved Ones. The number of people that have still not sorted their Wills or Lasting Powers of Attorney is staggering. If you plan to spend more on your car's MOT and service than you do on basic estate planning, think again.
- Television – do you really need the all inclusive TV subscription?
- Internet – there are always better deals out there for your data allowance and often include free landline calls.
- Mobile Phone – check out your allowance on your tariff. Did you really use all those inclusive minutes and texts? Could your tariff be changed to a cheaper one?
- Gym Membership – if you have one, do you get value for money? Would a bicycle, walking, running or swimming be cheaper but just as effective?
Pensions and Investments
- The investment market has changed. Worldwide sovereign debt problems are even worse than last year in addition to ongoing Brexit and Trump concerns. 2018 is crunch time for Brexit negotiations and a real risk of recession. We do not know how Brexit will go despite the UK seemingly being in an economic bubble with a weak pound keeping FTSE 100 high, exports buoyant and imports expensive. That said, pressure on pension deficits and the need for us all to save has made managing your long term investments and regular reviews essential.
ISAs and Allowances
- Make sure you have used up any tax efficient allowances that you have.
- Is the first part of your savings been put inside an ISA, Junior ISA or Lifetime ISA?
- Lifetime ISAs started last April for 18 to 40 year olds to get a massive 25% bonus on their savings. Are you saving to buy a house? Will you get your 25%?
Whilst we appreciate that some of the above may appear ‘Janet and John’ to many, it may surprise you how large amounts of money can be saved by just taking a little time to look after your finances.
For more advice and information on Money Planning. Contact Us.