Here are our tips to help you stay on top of your money.

Create a budget - Creating a budget is critical when setting new year's resolutions. It allows for greater financial stability and control and the ability to plan for future big purchases or expenses. When creating a budget, starting with your income sources is best. Record every source of income, such as employment salary, investments, or other income streams.

Next, list all fixed expenses such as rent or mortgage payments and utilities. Subtract this amount from your total income to calculate your monthly disposable income. This number can then be divided into categories like food, entertainment, travel expenses – whatever fits your lifestyle! 

Pay off debt - Having debt can be stressful and impact your financial situation significantly. Before beginning any plan to pay off debt, the most crucial step is understanding how much you have and where it comes from. Start by compiling a list of all your debts – including credit cards, personal loans, and student loans.

Then make sure you know when payments are due each month and what interest rate is associated with each account. You could consider consolidating this amount into one loan, paying off the debt with the highest interest rate first, exploring refinancing options or utilising balance transfer credit cards – whatever is best for your individual financial situation.

Build an emergency fund - Building an emergency fund is essential in order to remain financially secure if something unexpected arises. At the start of a new year, many of us set ourselves goals and take steps to achieve them. If you haven't done so, one essential goal is to build an emergency savings fund. Setting aside money can help you prepare for any unexpected expenses.

Protection matters - Life is unpredictable and having adequate protection in place is the best way to ensure that you and your family are secure if the unexpected happens. Reviewing your family's life, critical illness or income protection can help you identify areas of potential need and give you peace of mind knowing you have a plan in place if something were to occur.

It can also give you peace of mind knowing that if you encounter financial hardship, you have some resources available to help alleviate the strain. Aim to set aside between 3 to 6 months of living expenses in case of any emergencies or job loss.

Complete your Tax Return – If you receive one, you should complete your self-assessment tax return before 31st January each year. Don't leave it to the last minute. If you're a higher or additional-rate taxpayer, you can claim extra tax relief on your pension contributions. Begin by familiarising yourself with what information and documents you need to submit – such as payslips, bank statements, bills, and receipts.

Once you've got all this together, you're ready to get started on completing your return! If you are filing online, it's helpful to have digital copies of any documents at hand so that they can quickly be uploaded when needed during the process.

Maximise your Individual Savings Account (ISA) allowance - ISAs are a highly tax-efficient way to save and invest, as you won't pay any income tax or capital gains tax when you take money from your account.

As with pension contributions, the sooner you get your 2022/23 ISA allowance contribution invested, the sooner it can start working for you. Each individual over 18 can contribute £20,000 into an ISA each year, regardless of earnings.

Pension pot boost - The tax relief on contributions make pensions an incredibly tax-efficient way to save money for your future. This means that it makes sense to maximise the amount you save into your pension – subject to the maximum annual amount of £40,000 gross (2022/23 tax year) or 100% of your earnings, whichever is higher.

If you aren't able to pay a lump sum at this stage, look to increase your monthly contribution. Even a small increase can have a significant long-term effect on the value of your final pension pot.

Save for your children - If you haven't done so already, this is the ideal time to start saving money into a Junior Individual Savings Account (JISA) for your children or grandchildren. A JISA has the same tax benefits as an adult ISA, but annual contributions are limited to £9,000 (2022/23). You can pay into a JISA on behalf of your child up to age 18 when the account will become an adult ISA and control will pass to them.

Please note: This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

FP2023-012