There's no time like the end of the year to get your financial ducks in a row. If things went a little off-track this year, here's some tips on how to regain control including how to reduce your spending, manage any debts and make your money work harder. A few changes could help you start the new year on a firm financial footing.
Starting tracking your spending now to hit next year's goals
It's easy for spending to creep out of control if you don't keep an eye on it. Know your budget, and monitor your spending. This is especially true over the festive season, when there are lots of extra costs to take into account and we get paid earlier so have to make the money last six weeks instead of four. Whether it's using your bank statement, a notebook, a spreadsheet or a free budgeting app for your computer or smartphone.
This will help you to understand your current spending habits and where savings can be made.
Pay less tax
There are ways to reduce the amount of tax you pay without breaking any rules. Are you buying a bike? If your employer offers a Cycle to Work scheme the cost of the bike can be deducted from your salary before tax, which means you'll pay less Income Tax and National Insurance on your earnings. The cost can also be spread out over a number of months.
If you work at home, voluntarily or by choice, did you know that you can claim tax relief for phone calls and utilities?
Also, switching to a car with lower emissions and you will pay less in Vehicle Excise Duty, or switch to an electric car and pay none.
If you're married, and one of you is not working, or earning enough to pay tax, then you can benefit from the marriage allowance.
The lower earner can transfer any unused tax-free Personal Allowance to their higher earning partner, this saves up to £250 in tax.
Take control of your debt
Half of all workers in the UK are borrowing to meet their basic financial needs. If you're in this group, and you have some debt to repay, explore ways to speed up your repayments or get a better rate for a fresh start next year.
If you have a credit card you could save money by switching to an interest-free card, especially if you can pay the total down during the interest-free period. But make sure you do, because failure to do so will result in your debt growing further. Many banks and credit card providers offer 0% on balance transfers for the first year, so you could move the old debt to a new card and save money.
Where possible, start by paying down debts whi that are charging the highest interest whilst being careful to avoid any early payment penalties.
It can work out cheaper to consolidate your debts with a fixed rate loan.
Make your savings work for you
If you're going through the effort to build up your savings, then you want to make sure that you're getting the most out of them. Individual Savings Accounts (ISAs) offer tax-free interest and returns. Check the details of what's offered and see if you can get a better deal.
Here are some practical next steps to getting your finances in order:
Check your budget using our calculator
Look at lower-cost loans or interest-free options on credit cards as a way of managing your debt repayments.
Put your savings in a higher-interest account.
Don't try to go too extreme with any changes. Small improvements over time are a more sustainable way to make changes to your financial habits than trying to improve everything at once.
Our articles cover a wide range of mainstream financial products and employee benefits. Terms and conditions of each product may vary depending on your provider. Please ensure you check the specific terms and conditions of any financial products and employee benefits available to you from your employer.