BY the time you read this we will
be in early 2013. A new year
provides the chance for a fresh
start and is an ideal time to give
your finances a once over.
This way you can cut out
unnecessary expenditure and ensure
the money you earn is working as
hard as it
possibly can
for you in the
new calendar
year.
When
planning a thorough
clean-up of
your finances you need to make sure
that you take into account every
aspect of your personal finance,
looking at ways to pay down your debt and make your money go
further.
The first step should be to gather
together as much information as you
possibly can, from utility bills to bank
and credit card statements and then
examine your spending habits to see
how you can offset or, ideally, pay off your debt.
Once you have all of your personal finance information to hand
you can sort it into categories, such as
those listed below.
1. Monthly bills
Monthly bills include things such as
utilities, mobile phones, television and
broadband and you need to assess
whether you are getting value for money or simply paying for
services that you do not
need and do not use.
For instance, could you
pay less on your gas and
electric bills by simply
switching providers? Or
could you obtain a fixed unit
price to prevent being stung
by further price hikes? It
certainly pays to shop
around online and see what
is out there.
Alternatively, if your
mobile phone tariff offers
unlimited calls but you are
only using 100 minutes per
month, can you downgrade
the terms of your contract and save
money?
Whilst these may seem like fairly
small changes they can add up to big
savings in the long run.
2. Credit cards
Although you should, ideally, be
paying off your credit card debt in
full at the end of each month, this is
not always an option so you should
check the interest rates on any
outstanding balances and then try to
transfer them to a lower or zero per
cent credit card.
You are no doubt aware that the
credit card market is incredibly
competitive and at the time of writing
I can see various offers for 22-month
interest-free periods with a switch fee
of a mere 1-2%. Given the fact that
the average annual percentage rate on
credit cards for 2012 was in the
region of 15%, incurring this switch
fee to benefit from a lengthy interest-
free period is likely to be a shrewd
financial decision.
Paying a lower rate of interest
should ensure that your monthly
payments are reduced and you should
be able to pay your debt off sooner.
Also, whilst you have all this
information to hand, it may be a good
idea to set up automated payments as
this will ensure that you pay a set
amount each month and the payments
are made on time so you avoid any
penalty fees imposed by the lender.
3. Insurance
The next step is to check your
insurance documents, such as home,
car and pet insurance, and determine
whether you have the right level of
cover as you may be able to make
changes by simply changing the level
of cover.
You should also check when your
policies are due to expire and, if they
are up for renewal, shop around to
see if you can get a better deal elsewhere.
4. Credit reports
The next step is to check your credit
report (a good place to start is at
experian.co.uk) and make sure that
there are no errors on your report that
could be having a negative impact on
your credit score.
If you find any anomalies, then
contact the relevant credit referencing
agency as soon as possible and they
will instruct you on how to report the
errors and bring your file up to date.
5. Investment review
Another area for consideration is to
review your current investment
portfolio to ensure that it is
maximising the tax planning
opportunities available to you.
For instance, are you maximising
your annual cash or stocks and shares
ISA allowance? Have you used your
annual Capital Gains Tax allowance to
realise any held-over investment gains
in a tax efficient manner? Could you
make further pension contributions to
ensure you benefit from tax relief at
your highest marginal rate?
The good news is that the financial
year runs from April to April each
year, meaning you still have sufficient
time to make use of these allowances
whilst within the current tax year.
The benefits a financial
overview can provide
If you have followed the above steps,
you will have almost completed your
new year’s financial resolution and may
well be saving enough money each
month to put into savings or
investments.
If this is the case, then the next
step should be to seek some
professional financial advice to come
up with ways to make your money go
further and ensure it is suited to your
required attitude to risk and financial
objectives.
