New Year, New Financial Me: Top tips for 2020

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It is that time of year for New Year’s Resolutions! How can you plan your financial 2020 resolutions best for success? From my experience as a Financial Advisor, I thought I would share some ideas and hope these quick tips help you start 2020 off well.

1. Do a budget planner

By far the most important thing to do, and the most useful for a majority of my clients (which surprisingly few people sit down and do regularly until they see me!) is to work out your income and outgoings. Simple, I know, but very effective to make things clear. If you are self-employed it is often more difficult to work out, but base it on a conservative realistic expectation. Any extra you earn later will be a bonus!

2. Review your expenditure

You can now see what your situation is. Questions to ask yourself:

  • Do you have disposable income that you can use/save?
  • Can you pay off debts quicker?
  • Have you reviewed your mortgage – could you get a better rate?
  • Do you need to top up your pension?
  • Have you used your tax efficient ISA allowance for the year?
  • What about other allowances for Capital Gains and Inheritance Tax?
  • Are there things you do not need to be paying for? E.g. that gym membership you haven’t used for the last 4 months, or paying for a current account that has no real benefit to you that could be cancelled and save you money.
  • Can you save money by switching mobile phone tariffs/gas provider etc.?

3. What are your goals and objectives for the year?  

What do you want to achieve? Is it a holiday for next year, to buy that designer bag or pair of trainers? Define your objectives and work out when you want to achieve it by. Is it realistic? How does this fit in with your budget planner? Do you need to make savings elsewhere?

4. Prioritise and review it regularly

  • Assessing all your assets and liabilities provides a useful benchmarking tool to prioritise your spending and saving habits going forward. Go back to the budget to review. How does this fit in with your goals and objectives?
  • What is most important in your list of goals? Do you want to build that extension or buy that car? Shall I give up Sky TV to pay into a pension?
  • Take a balanced look and see how you are getting on. If you do this annually, how does it compare to last year? How likely are your goals to be achieved? Can you do anything to make it more likely by prioritising and allocating more money from somewhere else?
  • Annually, make sure all possible allowances are used – pension, ISAs, Capital Gains Tax and Inheritance Tax allowances for the year are so important to some people. They can be lost if not used.
  • Have you have taken out the appropriate policies (maybe you have life cover but no income protection). Have you got good coverage for both your family and possessions? Are your premiums reasonable for the coverage you have, or can you negotiate a better deal? Priorities over time will change. Maybe you have had a child and now need a different focus. Do you have too much or too little coverage?

5. Can you consolidate?

Have you got lots of pensions and ISAs with different providers? Have you reviewed them to ensure the funds are still appropriate? It is much easier to do in one place. Seek advice to ensure you do the right thing. You do not want to give up good benefits for the sake of ease and there may be benefits to keeping them or better providers for you that you could switch them to.

6. Make a plan to reach your goals – and stick to It 

This is the toughest and most important part of any resolution. Whatever goal you have, it’s likely to require significant financial discipline. Formalise a plan, maybe in consultation with your financial advisors. Give yourself frequent reminders of your goals throughout the year and review your progress. This may help to keep you from extra spending.

7. Start small

With the excitement of the New Year, you may be tempted to make extreme changes to your lifestyle. Don’t set yourself up for failure by trying to alter your saving and spending habits drastically. Take it step by step and you will see what a difference it can make. Good habits and good discipline is your key to reaching them.

These tips are what I have seen work for my clients. I hope it helps. Good luck with your 2020 goals!

Amy Salter is a Chartered Financial Planner at Aspire Independent Financial Planners LLP.

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