With the start of a new year comes the annual tradition of setting yourself a New Year’s resolution. However, if you’re one of the thousands of people that set the same resolution every year, only to forget about it after the first month, maybe it’s about time you set yourself a goal that doesn’t involve forcing yourself to the gym and that will help improve your financial stability. Sounds like a win-win, right?
To make a start on getting your finances in order, take a look at our top tips below.
Our top tips on getting your finances in order
Getting your finances in order can be daunting which is why we’ve broken down each step you’ll have to take towards achieving financial stability.
1. Carry out a spending review
To begin getting your finances in order, you’ll first need to review your income against your monthly spending habits. Once you have calculated the cost of all your necessary expenses such as your bills, transport and food shopping, you should be able to assess how much you’re spending each month on casual purchases, including clothes, takeaway food and subscriptions.
During this process, it’s important to recognise that all of your casual spending adds up and could be seriously impacting your finances. With this in mind, we’d recommend creating a monthly budget to try and get a hold on your personal finances heading in to 2021.
2. Consider re-mortgaging
With your mortgage being one of your largest financial commitments, re-mortgaging while you’re trying to get your finances in order may feel like taking one step forward and two steps back. Yet, what if we were to tell you that you could be saving thousands each year with a better mortgage rate? Though this isn’t a decision to be taken lightly, we’d recommend giving it some thought, especially if your current mortgage deal is about to end or the value of your home has recently risen.
3. Review your pension
With your pension acting as your income after retirement, it’s important you review your pension regularly to ensure it’s working hard for your future. By regularly reviewing your pension, you’ll be able to monitor the growth of your funds and transfer to a different scheme should your current pension be underperforming. Taking advantage of pension funds with high growth rates will help you towards achieving a financially stable future.
4. Claim on tax allowances
Without even realising it, you may be missing out on tax claims that you’re entitled to. Checking you’re claiming on all the relevant tax allowances will provide you with better insight into your financial position. If you review your tax entitlement and find you’re eligible for an allowance you’ve never claimed, you may be entitled to make a backdated claim.
For those that have recently started working from home due to Covid-19 restrictions, you’ll likely be qualified for a working from home tax relief to cover the additional costs of remote working, such as heating, broadband and home contents insurance.
5. Avoid auto-renewing
Auto-renewing contracts are a trick of convenience that could be causing you to spend more than you need to on certain services and products. Whether it’s for your car insurance policy, your utility provider services or your fixed-term savings account, it’s important you regularly review your contracts to see if you could be saving by switching providers.
6. Create a Trust
Creating a Trust will encourage you to get your finances in order for both you and your family. With a Trust, you’ll be able to control the distribution of your assets, should anything happen to you. By defining exactly where you want your funds to go and how you want them to be used, you’ll be able to contribute to your family’s long-term financial stability.
7. Seek advice
Seeking advice from a professional Financial Planner may be the most important step you can take towards getting your finances in order. With the help of a Financial Planner, you can analyse your current expenses and savings before setting yourself an attainable financial goal to aim for.
At Penguin, we’re committed to helping people live their best lives, by making smarter financial decisions. Through analysing your current financial situation, we can map out a long-term financial plan that will provide you and your family with future financial comfort.
So, if you think you’re ready to get your finances in order, get in touch with our team of expert Financial Planners.