16th November 2018 at 3:14pm
By Eleanor Tucker
The year is coming to a close and talk has turned to Christmas and the New Year.
And with the nights long, it’s a perfect time to have an end-of-year sort out, on the evenings you’re not heading out to do some festive shopping or socialising, that is…
You don’t have to be on the property ladder yet or even established in your career to benefit from giving your finances a once-over to make sure you’re taking the right steps when it comes to your money.
So, instead of wrapping presents, why not spend an evening wrapping up your finances for 2018 with our seven simple steps?
‘Winter’ clean your bank account
Step one of your review – go through your bank statements with a highlighter pen and get on top of your income and outgoings. Better still, manage them online.
Check for any free subscription trials that have ended which you’re now being charged for and insurance policies for items you no longer have, or that have renewed without you being notified.
Pay extra attention to those direct debits. Cancel anything you don’t need and consider redirecting some of the money to reduce any debt or into a savings account instead.
A few small changes now can help build a stronger savings buffer and could make a big difference to your future in 2019 and beyond.
Let technology upgrade your money management
If you want to really get a handle on your money, new apps can give you an overview of everything you earn, owe or spend in a single place.
Technology like this is revolutionising how many of us manage our money, allowing you to budget more effectively by managing multiple accounts, including pensions and savings, from different places.
Read more about apps that can help your budgeting.
The season to save
Traditionally this time of year is the one when we do the most spending but once you’ve reviewed your finances and have your money working smarter, consider saving a bit more into a savings account to build up a savings buffer to cover the unexpected, or you could put a little more into your pension – which can be a tax efficient way to invest for your future, whatever the time of year.
Track down any mislaid pensions
You might not have too many jobs under your belt yet but with each new job you start, chances are you will join a new workplace scheme. Frequent job changes, which are common in the millennial age group, is one of the reasons why people can lose track of their pensions.
If you’ve lost track of one, don’t worry, you’re not alone – recent research carried out by the Pensions Policy Institute (PPI) on behalf of the Association of British Insurers (ABI) revealed that there are around 1.6 million pots worth £19.4bn unclaimed – the equivalent of nearly £13,000 per pot.
That’s a lot of pensions – so it’s worth checking if one of them is yours. Read about Tracking down a lost pension in our article.
Your first port of call should be your pension provider, or contact the Government’s Pension Tracing Service.
Consider bringing your pensions together
If you have managed to accumulate a few pensions, it might make sense to combine them into one.
This could make it easier to check how much you’ve put away – and how your pension investments are performing, bearing in mind that the value of your fund can go down as well as up and you may get back less than you paid in.
Combining pensions isn’t right for everyone and before you consider this, you need to be sure that you aren’t giving up any valuable guarantees that your current pensions offer.
Get to know what you’ve got first before making any decisions – and do consider taking professional advice before you do anything.
Make the most of tax-friendly savings
The end of the year is also a good opportunity to think about boosting your ISA savings, if you have some.
An ISA can be a useful way to put money aside for things like a deposit for a home, holidays, a wedding – things that you are more likely to need in the short or medium term.
Your ISA allowance now sits at a generous £20,000 each year, so, if you’re thinking about an ISA – or topping up an existing one, don’t leave it until the end of the tax year to make the most of it.
Instead, why not make the most of any tax-efficient growth potential now, and then start again in the new tax year next April?
Tax return: act now to make tax less taxing
On the subject of tax, if you do self-assessment, don’t leave your tax return too late this year. Before Christmas could be the ideal time – you only have until 31 January, 2019 to submit yours online for the 2017-18 tax year.
Make time so that you make the most of any important allowances and tax reliefs you are entitled to – and sorting it out before the New Year can be a weight off your mind.
Part of this is down to using your tax return to claim back any higher or additional tax relief you are entitled to on payments you’ve made into your pension. Read more on maximising pension tax breaks here.
Plus, you never know, you may even be due a tax rebate!
Let’s get 2018 wrapped up
With your finances in better shape, you could end the year feeling much more organised – and use the opportunity to make the most of your money and top your savings plans up.
So, take a night off from Christmas shopping and sort out your finances… you could find you have a lot to look forward to in 2019 – and beyond.
Elle Tucker is a freelance journalist.
The information here should not be regarded as financial advice and is based on our understanding in November 2018. Remember that the value of your investment can go down as well as up and may be worth less than you paid in. Laws and tax rules may change in the future.