Easy ways to get your financial life back on track in the NewYear
These seven simple steps could help you smooth out your cash and savings, writes Vicky Shaw
As 2018 approaches, and many of us are starting to think about New Year resolutions, this is a great time to sort out any money matters.
On average, it takes people five months to repay the debts they rack up over Christmas, according to research from Nationwide Current Accounts.
But by acting quickly in the New Year, and changing a few financial habits, you may find you can get back on track more quickly – and the transformation doesn’t always have to be painful.
Here, Sarah Coles, a personal finance analyst at financial services firm Hargreaves Lansdown, suggests seven simple tips to transform your financial life in 2018...
1. GO ON, TREAT YOURSELF TO A FINANCIAL MAKEOVER
You may be a tad too cash-strapped for much of a social life after Christmas and New Year – but while you’re cooped up indoors, this could be a great opportunity to take stock of your financial life.
Consider your overall pension and investments position. Review how much you’re paying in, whether that’s enough to meet your goals, and how to free up more cash to invest.
Take a look at performance too, so there are no nasty surprises waiting when you finally come to cash in your investments. You also need to consider whether the mix is still appropriate if your circumstances have changed.
2. CLEAR AWAY ANY FINANCIAL CLUTTER YOU MAY HAVE
Tidying up your finances, along with any discarded Christmas wrapping paper, will make life easier.
If you have built up several pensions, Isas, and a handful of individual shares over the years, you may either have a complex filing system or little idea about what you have – or where it is.
Dig out the paperwork on your old pensions, and check whether there are any valuable guarantees or expensive penalties for switching.
If you are free to switch, consider whether it may be worth moving them into a single, more modern pension, which may be cheaper in addition to offering more investment options.
3. CONSIDER GIVING UP WHAT YOU DON’T LOVE AHEAD OF WHAT YOU DO
The small luxuries in life, such as morning coffees and after-work takeaways, may be the obvious candidates for the chop in your new, healthier financial regime – but if they are a great source of joy, losing them will be a constant, ongoing battle – increasing your chances of failure.
Before you give up the things you love, it makes far more sense to give up what you don’t love at all – like paying more than you need to for utilities, or buying expensive grocery brands – so see if you could pay less simply by shopping around.
4. CONSIDER DIVIDING UP YOUR CASH UP INTO SMALLER PORTIONS AND BUILDING A SAVINGS PORTFOLIO
Remember, it’s wise to keep around three to six months’ worth of expenses in easy access accounts as an emergency fund – in case you suddenly need access to cash very quickly.
Once you have that in place, for periods of between one and five years, you may want to consider