With the New Year upon us, it's often seen as a fresh start, a blank page, a new chapter. When better to enforce new and positive financial habits, especially after the most expensive time of the year?
Sit back and let's make the most of the new beginning, as we have the 3 financial New Year's resolutions for you…
Making a Budget
It's simple, but it's effective. Life has its expenses, it's how you monitor and adapt to those expenses that create an effective budget. It can be daunting, to begin with, so it's best to start with how much you spend on living expenses (such as rent and bills) and then how much money do you spend on having fun (going out, shopping, Netflix etc…)
When you need to cut back, that's when you weigh up items on your entertainment list in order to find the balance between enjoying yourself now and saving for the future.
Making a Pension Plan
The last 20 years have seen a huge change in the withdrawal of final salary pension schemes. This means that younger generations need to take control of their retirement planning.
An easy way to do this is to opt into auto-enrolment workplace schemes. Here, an employer contributes to your pension and there are generous tax breaks. Compound growth is also a key factor, as £200 invested monthly for 40 years at 5% p.a would result in over £289k over time. This means that the earlier you start contributing, the bigger the benefit you will see.
Making an Emergency Fund
With the cost of living rising, household bills such as food, petrol and energy are rising, with inflation now at 5.1%. By creating a “Rainy Day” fund, you have some financial security should you find yourself with a gap in employment or should an unexpected problem arise.
An emergency fund will provide protection against any financial uncertainty, meaning mortgage or rent payment can still be met along with essential bills. This can be arranged by a simple direct debit payment into an ISA or into a separate bank account.
If you have any questions about saving, feel free to get in touch today.