Well, Christmas is over and you are probably left with a few more pounds around the waist and fewer in the bank.
It’s not always easy to recover from a period of spending but it can be done. Managing your finances just takes a bit of time and some determination!
Give your finances some attention now, and this will help you understand where your money is going and how it can best be stretched to cover everything on your wish list.
In the first article in this series on managing your finances, we look at getting to grips with your income. In the second article, we will look at getting a hold on your expenses.
In this first part, let’s start taking a look at your income
How much are you taking home each month? Are there employee benefit schemes on your payslip, which you do not need? Is your tax code correct? If you are self-employed or running your own company look at how much you are charging and whether you are working enough. Could you increase your income in any way?
1 If you are running a limited company the tax on dividends is far lower than on income and no national insurance is payable. Ask your accountant whether the balance is right for you. Also, if your spouse is a lower rate taxpayer than you, ask whether some of your dividends could be paid to him or her.
2 If you are self-employed, ask your accountant to calculate whether you would pay less tax as a limited company.
3 If you or your partner earn more than £50,000 and have children, you will have lost your child benefit payments this year. These were worth £20.30 a week for one child and £13.40 for each subsequent child. If your earnings are not far above the threshold there are lots of opportunities to claw back the benefit, by making pension contributions, taking childcare vouchers or even taking an extra week’s unpaid leave.
4 Are you eligible for any benefits? I am amazed by the number of young families I meet who can top up their income with working families’ tax credit. It’s easy to research and obtain a forecast. Just go to www.hmrc.gov.uk/taxcredits/.
5 Are you getting the best returns on cash deposits? Find out what the interest rate is and then shop around. www.moneyfacts.co.uk lists all accounts. Another 1.5% a year on £20,000 is £300 a year.
6 If you are invested into funds, have a look at how they have performed and what charges you are paying. If you have an adviser they can do these reports for you. If not, you can look at www.trustnet.com. Squeezing better returns over a long period of time makes a real difference, as the growth on investments is compound.
7 And finally, is there anything you can sell? Ebay and Gumtree make this really easy, but your local paper and free-ads are where many local people still look for pieces of furniture and old bikes. Or take a bag of your unwanted stuff into a second-hand bookshop or clothes store to generate some instant cash.