Your financial resolutions for the new year...

Be positive and start 2017 with a plan. The last moments of the old year and the first days of the new are a great time to sit down and get your finances in order.

Set aside an hour or so away from the fun and frolics and work out a way forward. Easy come and easy go isn’t a financial plan and can get you into severe difficulties. There is always a reckoning.

So, develop a personal budget whereby you cut back where you can, spend wisely, save for future goals and set something aside for emergencies. In short, your income and expenses need to be at least in balance, and, because savings are important, your income should ideally be in excess of your outgoings.

Much depends on your personal circumstances so total up your income streams – salaries/wages, interest and dividends, bonuses, retirement income, state support. Then write down your expenses such as mortgage, credit cards, car loan/ petrol/depreciation, childcare, food, clothing … absolutely everything. Compare the two. Are there ways you can boost your income? Are there ways you can cut your expenditure? Think – can I work more productively?

For those on the margins, go straight to the basics.

Review debt – separate good and bad debt and cheap and expensive debt, and restructure where you can. For example, store cards and particularly pay day loans have very sizable interest rates.

Cut back on entertainment and recreation – movies, DVDs, concerts. Don’t buy designer clothing and fancy trainers.

Prioritise what is important and restrict non-essential and vanity payments to special occasions.

For those less cash-strapped, a few tips on how to be more astute.

Firstly, have you made full use of this year’s 2016/2017 tax allowances? With the tax year looming in the not too distant future it is vital you act now.

Have you made the most of your ISA allowance – £15,240 soon to be rising to £20,000 next year?

£40,000 per year can be paid in to a pension which will receive tax relief of 20, 40 or 45 per cent from HM Revenue & Customs depending on your tax status. Max out this year’s and remember that you can carry forward the last three years’ allowances.

Make use of your dividend allowance (£5,000) and Capital Gains Tax Allowance (£11,100).

Consider investing in offshore and onshore bonds which are highly efficient given a tax deferred five per cent withdrawal is allowed per annum.

Review your mortgage – with Interest rates at all-time lows, are you on a standard variable rate and could you benefit from locking in your mortgage at a lower fixed rate.

Review life assurance and critical illness cover – circumstances change, new children are born, it’s important to ensure that your cover is relevant to you situation.

All this will take personal discipline. Seek advice if you need it. But at the end of the day it is worth the effort. Trevor Law is managing director of Merito Financial Services, chartered financial planners, based in Solihull. Email:tilaw@meritofs.com