Start the year as you mean to go on


After the excitement of Christmas and the New Year, it’s January. That typically means gyms are busier, people are abstaining from alcohol and this year others are embracing Veganuary; Greggs and their vegan sausage roll included!

You may have made a New Year’s resolution, but did you realise that the vast majority fail? Research from YouGov at the end of 2017 found that six in ten people failed to keep the resolutions made at the start of that year. The root cause is often good intentions, but unrealistic objectives that lack reward.

But, what about your finances? The start of the new year is an excellent opportunity to step back and take stock. The foundation of your financial plan should be well considered, setting realistic goals and objectives. The reward is financial security in later life, so embracing financial planning really is a resolution worth following through.

Where to begin?

Initially, you must consider your current position. You may have workplace pensions, savings and other policies already in place. If they haven’t been reviewed in some time, now is the perfect opportunity to ensure they remain relevant and appropriate.

Consider what your future may hold, you can then begin defining realistic goals; your financial resolutions. It might be planning to retire at a particular age, or funding your children’s education. Whatever your resolution, after reviewing your existing arrangements, there are a number of planning opportunities to help make it a reality.

1. Budgeting

Reviewing your household spending is a great place to start. Research has shown that on average we waste more than £250 a year on forgotten or rarely used subscriptions. Topping the list of most unused subscriptions is a gym membership, another reminder that most New Year’s resolutions are unsuccessful.

Shopping around for the best deal can also help free up some additional cash. There are plenty of price comparison sites now available to save money on insurance and energy bills, for example.

2. Reduce your debt

High-interest, short-term debt should always be repaid as a priority; credit cards and overdrafts are usually the most expensive. Try to repay a credit card in full on a monthly basis if you are using it for the additional purchasing protection or to improve your credit score.

Whilst the Bank of England base rate rates remain low, your mortgage is likely to have a low-interest rate. Overpaying now, if you are able to without charge, before a potential rise in interest rates, will see your capital balance and term of mortgage reduce.

3. Build an emergency fund

It’s wise to build a rainy day fund for unplanned expenditures or in case you are unable to work for a period of time. It’s the general consensus that between three and six months of income should be kept in a readily accessible savings account.

4. Maximise your tax-free allowances

There are two main personal tax-efficient allowances available you should be taking advantage of:

  • Your ISA (Individual Savings Account) allowance, which is currently £20,000 and due to remain at this level in 2019/20
  • Your pension Annual Allowance, which is currently a maximum of £40,000, but does have some restrictions and opportunities that could affect the amount you can contribute. If you want to discuss this in more detail, please get in touch.

The tax year ends on 5th April, so you’ve still got time to make use of your 2018/19 allowances too.

5. Review your protection needs

As well as ensuring your pensions and investments are on track to fulfil your goals, reviewing your insurance and protection requirements is also important. Ensuring you are financially secure if unable to work due to an accident or sickness will keep your financial plan on track. Equally, if you were to pass away prematurely, life cover will ensure your family are still able to fulfil their goals.

Sticking to your resolutions

The key to keeping your financial resolutions is identifying realistic goals and tracking your progress. A financial plan should be regularly reviewed, on at least an annual basis, to ensure it remains relevant to your evolving circumstances. Remember the ultimate reward; your financial security.

As financial planners, we are here to help you define and achieve your objectives. Don’t waste the year, embrace your finances and start 2019 as you mean to go on. If you’d like help putting a plan together, please get in touch, initial meetings are always at no cost.