Did you lose track of your financial position somewhere in the midst of the Christmas rush? The constant PayPal payments going out of your account, the last minute panic shopping, and the brilliant social life synonymous with the festive season often leave many medics somewhat confused about where they are with their money (if they weren’t already!).
With all the celebrations over, it’s now time to grasp the thistle and wrestle your finances back under your control. Follow these 6 tips and you’ll be back on track in no time.
Tip 1: Don’t ditch your little luxuries!
January is tough enough without cutting the little luxuries that make life a bit more enjoyable! In my experience, giving up all the ‘good stuff’ like not getting a great coffee on the way to work or having a catch up drink with a friend you didn’t see in December, just hastens the inevitable act of ‘falling off the wagon’.
Instead, squeeze more value out of the really dull things in life like your utilities and food shopping. Use one of the many utility comparison sites to see if you can get a better deal, and why not challenge yourself to a month shopping at a cheaper supermarket to see how much it saves you. As my grandmother used to say “take care of the pennies and the pounds will take care of themselves”…pounds you can spend on something much more fun!
Tip 2: Review your credit card deals and manage your budget
When was the last time you checked how much you’re paying in bank fees? Do you know what interest rate you’re paying on your mortgage? They’re easy figures to forget.
You may want to consider increasing the amount or frequency of your payments to save interest. Or it may even be time to look for a better deal.
Although interest rates are abnormally low at the moment, it’s unlikely they’ll stay that way forever. Even so, some types of debt (store cards for example) charge higher interest than others. Debt repayment represents a risk-free, tax-free return equal to the interest you will avoid.
It’s always wise to work out an affordable repayment schedule which repays your most expensive debt first. Comparison websites abound so spend a little time looking at your options.
Tip 3: Use all of your annual allowances
We should all be setting an affordable amount of savings aside on a regular basis. Ideally the money should go out on the same day that you get paid; what you don’t see, you don’t miss so to speak. Every time you get a pay increase, remember to increase the amount you are saving.
You can save into ISAs on a monthly basis as well as in lump sums. It all helps towards making full use of your tax-free ISA allowances. There are also many different types of ISAs to choose from depending on what you’re saving for, for how long, etc.
Seeking capital gains tax and inheritance tax advice will also leave you more in control of your money to spend on the things you enjoy. Speak to your financial adviser to see how they can help you.
Tip 4: Protect those you love the most from the things you hope will never happen
Are you one of the 12 million Britons who doesn’t have a back-up plan if there was a financial disaster?
No one likes paying for insurance until they need to make a claim.
If you already have life cover, make sure you have taken out enough to protect your family’s lifestyle. This should also include critical illness protection and adequate income protection which will pay you a tax-free replacement income if you fall ill and cannot continue to work. It’s best to ask your financial adviser what you need based on your own individual circumstances.
Make sure too that your home buildings and contents cover is adequate, and that the sum assured reflects the true rebuilding and contents replacement. Save money by insuring the rebuilding cost, not the current value of the building.
Tip 5: Review your risk profile
In light of Brexit, Mr Trump and all the other uncertainties around the globe, you could well be questioning what and where you are invested in at the moment. Are your current arrangements still appropriate? Should you be rethinking your attitude to risk?
It’s always good to review the basics of your financial plan every so often. Never hesitate to contact your financial adviser to double check the logic behind your investment strategy. If you don’t have a dedicated financial adviser, maybe now’s the time to start a conversation with one. Specialist financial advice can help you strike the right balance in your portfolio.
Tip 6: Review your mortgage rate
Are you still on a standard variable rate? Are you coming to the end of your existing fixed rate? What should you do next?
The rates charged for mortgages are on the up but there are still plenty of great competitive remortgage deals available, with fees such as valuations and legal fees paid.
By comparing the whole mortgage market (as we at Legal & Medical do), you get the full picture of what’s available to you so that you really do find the best deal that suits you, both now and in the coming years.
Always remember though, your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.
And then what?
Regaining balance with your finances can seem a daunting task but it’s not impossible. You will feel so much better once you have a clear idea of where you are now and how to get to where you want to be financially.
You also don’t have to tackle it alone. Just give us a call to arrange a meeting and we’ll get you on the right track in no time.
How in control of your finances are you at the moment? Let us know by adding a comment below.