It’s that time of year when many of us start reflecting on the past 12 months from a financial perspective. Our team have listed twelve ways to help you conquer your financial planning for Christmas and to give you a more confident outlook for 2024. As they say, a little planning goes a long way!

1. Pay off your debts
   It’s been a tough year for many people, no matter what your level of income. Middle earners especially have been hit with higher tax rates and rising household bills. Credit cards with high-interest rates are notorious for trapping people in spiralling debt. Aim to pay off cards as soon as possible to avoid paying interest.
2. Review your emergency fund
   Even some higher earners have felt the squeeze on their finances this year. If you’ve had to draw money from your emergency fund unexpectedly, consider how to top up this cash reserve. It is recommended to have funds that can cover at least six months of outgoings. This will also ensure you have enough to pay for urgent repairs.
3. Check your mortgage deal
   If you are approaching the end of a fixed-rate mortgage term, it’s important to look around for an affordable deal. High-interest rates have hiked up mortgage payments for many homeowners this year, putting a strain on outgoings.
4. Review your pension forecast
   When did you last check your pension forecast? Check whether you’re currently making enough contributions to ensure you have a comfortable retirement.
5. Check your level of protection
   Different forms of insurance can offer a much-needed lifeline, should the worst happen, and you or your partner are unable to work. There are different types of policies available, such as critical illness, income protection and life assurance. Check your current ones offer an adequate level of protection for you and your family.
6. Consider opening an ISA
   ISAs are Independent Savings Accounts, and they can provide you with a useful way to save money tax free. You can choose between a Cash ISA, Stocks & Shares ISA and an Innovative Finance ISA. The allowance is £20,000 per tax year, and this can be split across all ISAs.
7. Assess your legacy
   When did you last have your estate valued? Do you know your inheritance tax liability? At the time of writing (December 2023), estates worth more than £325,000 are taxed at 40%. There are a few exceptions, such as zero tax if an estate is passed to a spouse or partner. A property worth up to £500,000 can also be tax-exempt if it is passed directly to a child or grandchild. Speak to our team about an estate review.
8. Check your Will
   A Will is your opportunity to ensure the right people inherit from you when you die. Otherwise, intestacy rules will apply, which means the government will decide who inherits from you. In the case of blended families, this can lead to those inheriting whom you least expect! Make sure you have a legally binding Will in place, and it’s up to date. Your Will needs to reflect your current situation, for example, where you live, what you own, your children and grandchildren.
9. Put in place Lasting Powers of Attorney
   Lasting Powers of Attorney are often overlooked but are essential when needed. They give your appointed attorneys the power to make decisions on your behalf if you were to lose mental capacity. This could be due to an accident or a serious condition, such as a stroke, heart attack or dementia. There are two types: Property & Financial Affairs and Health & Welfare.
10. Set some new goals
    Life changes, so your 2023 goals may look a little different as we head into the new year. You may have children starting school or heading to university next year. You might be considering retirement or semi-retirement. Review your current financial plan and set some new goals for 2024.
11. Plan any big spends for 2024
    Do you have any large outgoings planned next year? Are you moving house, buying a second property or renovating your home? You might be planning to go on a luxury cruise or holiday, or to buy a new car. These big spends need to be factored into your financial plan through practical cash-flow modelling.
12. Check your tax position
    If you fall into the higher income tax threshold, it might be worth considering paying into a pension to reduce your tax liability. Although the Chancellor recently announced welcomed cuts to National Insurance Contributions (NICs), high-income tax may still have a negative impact on your finances.

Your Financial Planners in Nottingham and Lincoln

Over the past year, most people have felt the impact of the cost-of-living crisis. Now inflation has fallen, along with energy bills, and we hope this will lead to a fall in interest rates too. This will create less of a burden on people in terms of mortgage rates and other outgoings.

At Balance: Wealth Planning, one of the ways we help our clients is through cash-flow planning. Using sophisticated software, our Lifetime Wealth Forecast will help you make better financial decisions. Based in Nottingham and Lincoln, we have a team of financial planners who will help you create a sound financial plan for the year ahead.

Need to update your financial plan for 2024? Get in touch to speak to our financial planning team.

Sources:

https://www.infinitysolutions.com/blog/twelve-days-of-christmas-financial-checklist/

https://www.suttonsifa.co.uk/spotlight/suttons-financial-planning-guide-for-the-12-days-of-christmas/

https://www.gov.uk/individual-savings-accounts/how-isas-work