By Balance team, Mar 10 2017 10:00AM
With only a few weeks to go until the end of the financial year, how are your finances shaping up? Did you manage to put any measures in place after our financial checklist at the start of the year? If you feel like you’re drowning in paperwork and your personal finance to-do list is getting every longer, read on….
1. Get organised
To assess your financial position and accurately review where you are, collect together any relevant paperwork. This includes bank account statements and statements for any savings and investment accounts, e.g. share trading accounts, ISAs and bonds. Next, collate your pension statements including private, state and any final salary pensions.
Do you keep a record of your household bills? If you’re keen to understand where it all goes, take a look at your bank statements over the last three months and add details of your average bills and spending to a spreadsheet so you can see exactly how much is going out.
You might also find it helpful to have a summary of what have coming in, whether that’s from your salary, business income, pension, savings interest or dividends.
2. Get rid of any unwanted bills
Once you have done the calculations, it’s time to look for the things you would rather not spend your money on – this could be forgotten subscriptions for magazines or online services, small duplicate insurance policies, or memberships you don’t use.
Remember that your money is simply a tool to help you feel secure, do more of what you enjoy in life and support the people around you, so there’s nothing wrong with spending money! But you will want to make sure that you are using your money on things that are valuable and important for you.
3. Start saving sensibly
If you haven’t already done so, it is time to review your current savings accounts. How much interest are you receiving? These days, most savings accounts offered by high street banks have very low interest rates, so you may choose to switch to a Fixed-Rate Savings Account or a Regular Savings Account – see our previous blog on this, Preparing for Your Tax Return, which goes into more detail.
Have you been using your ISA allowance for your savings? For the tax year 2017/2018, the ISA limit will increase to £20,000 but for now the limit is £15,240.
4. Refocus your investment strategy
Did you find any details relating to stagnating investments in your paperwork? Old investments set up years ago, collections of shares you inherited or bought through your employer? Perhaps you are someone who has a portfolio of shares you look at from time-to-time, without a solid investing strategy? Whatever the case, you probably already know you might not be making the most of your money. Having your money managed professionally can make a big difference.
It’s also useful to remember that investments which are very focussed in just a few areas (lots of shares just with one company for example) can be very high risk. Ask anyone who worked for a bank where they were encouraged to own shares. They felt like a safe bet at the time, but for many people they’re now worth a fraction of what they paid for them, with little hope of recovery in the short term. One key strategy to protect yourself from the risks of having all your eggs in your basket like that is to diversify – as widely as possible.
Taking good care of your money and having a sound investment strategy should lead to feeling more comfortable and enjoying better returns – talk to one of our financial planners for investing advice.
5. Pension check – ready for retirement?
You’ve found your pension paperwork, so check the figure which gives a forecast of the likely income you will receive when you retire. How does it look? Consider your future plans: will this level of income match the lifestyle you want to lead post-retirement? Due to recent pension freedoms, you can now access your pension at the age of 55 more flexibly than ever before. The advantage here is that you can start to draw from your pension gradually as you head into retirement. However, the obvious risk being that, without careful, thoughtful planning, you could run out of money!
You might also want to look at consolidating your pensions to improve on costs, options or just to make things easier to manage. If you’re unsure whether you have got details of all your pensions, then contact the Pension Tracing Service, where you can ask them to track down pensions from old employers. If you have any pensions you’re not sure what to do with, then talk to one of our financial planners who can review these for you.
In need of a financial Spring Clean? If so, get in touch to speak with one of our financial planners who will be more than happy to carry out a review for you.