Over Christmas and New Year, it’s easy to go a little wild on our spending, with Christmas shopping, parties and new outfits, and food to buy. Then just as we embark on our New Year’s resolutions of cutting out booze and starting a diet, the credit card bill lands. Great.
But even if your plan to get yourself fit is rapidly fizzling out, you can still whip your finances into shape.
The good news is that a few simple steps can make a big difference. They can help you feel more in control and may even save you money along the way.
Here are my three top tips about how to get started:
1 Know what you’re working with
You can only start to really get to grips with your money once you know what you’ve got, where it is and what it’s for.
A spreadsheet is perfect for this job. It doesn’t need to be complicated and you just need four simple headings to start with. Assets, Liabilities, Income and Expenditure. Under each one, list what you have and how much it is worth.
2 Reduce your costs
Look at all areas of your spending to start with, especially bills, mortgages, loans, credit cards, investments and pensions. There are some great websites that help you search for better deals on your utility bills (see below).
A word of warning though. You can easily spend hours of your life shopping around for the best deal but end up saving £20 and then doing the whole thing all over again a year later. If, after taking a quick look at the alternatives, it looks like you’ve got a reasonable deal already, don’t give yourself the hassle of moving unless you really want to.
You can often make big savings by moving your mortgage, loans and credit cards to different providers. It’s worth bearing in mind however that some mortgage lenders and some mortgage deals aren’t listed on all comparison sites and it can often be worth going through a specialist mortgage adviser to check what they can come up with.
The biggest savings can usually be made in an area that people rarely think about: your investment and pension plans. Very often people are paying much, much more than they need to and it’s eating away at their savings every year.
For example, it wouldn’t be unusual for someone to pay at least 1.5% of their pension fund away in charges. For a £250,000 pension pot that’s £3,750 a year. This can often be reduced to 0.5% a year or even less which is a massive saving of £2,500 year on year.
However, most pensions and some investments aren’t very straightforward to compare so it’s always a good idea to take financial advice. The savings you make will usually be far more than the fee you pay for advice.
3 Maximise your income and savings
Most of us are pretty good at finding the best interest rates for our savings and using the annual ISA allowances. But you really need to review all your investments together every year (at least) – either yourself or by speaking to a financial adviser.
Your money is yours and you’ve worked hard for it. Yes it pays your bills, but just as importantly it also pays for your holidays, treats and memorable experiences. It allows you to do the things you enjoy and to help the people you love.
So surely you owe it to yourself to keep it in good shape and working hard for you?
Find out more…
www.moneydashboard.com A great budgeting tool which helps analyse your expenditure.
www.moneyfacts.com Comparison site for mortgages and credit cards.