Many of us feel that our personal finances could do with some attention, but where to start? What’s most important? Which areas of your finances need a makeover?
Based on the clients we see and the enquiries we get, we’ve put together a list of six tips to help you improve your personal finances.
We’d love to hear your thoughts, please leave any comments as well as your own financial tips at the bottom of this article.
1. Standard Variable Rate mortgages
Despite the Bank of England Base Rate being set at 0.5% for over three years, a number of high street lenders have recently increased their Standard Variable Rates (SVR).
The latest example, following similar moves by the Halifax, Bank of Ireland, Co-operative Bank, Clydesdale Bank, Yorkshire Bank and Natwest / RBS, was Santander, who increased their SVR by 0.5% earlier this month.
The changes have increased the mortgage payments of millions whose loans are linked to the SVR.
If you are one of those people affected, or have a mortgage linked to your lender’s SVR, we’d suggest you review your current mortgage deal, perhaps to get a lower interest rate, or indeed to fix your rate to prevent payments rising in the future.
Start by talking to your existing lender, check your current rate and if you would be penalised for moving away. Also, ask what deals they have to keep you as a customer; many lenders will offer you a special rate to stop you remortgaging, although they won’t advertise the fact you have to ask.
Then compare the rate offered by your existing lender to the best alternative in the wider market, which of course our mortgage adviser, Linda Wood, can help you with.
2. Existing pensions
How much will they give you in retirement? Is the amount of money you are paying into your pension right? How much are you losing in charges? How are your pensions performing?
Four crucial questions many people can’t answer; if you can’t either you really should get your existing pensions reviewed.
Think about it another way, if you had money in a savings account you would regularly check that you are getting the best interest rate. If you have a mortgage you will check you are on the best deal. Most people service their car more than they do their pension!
Why then don’t most of us pay as much attention to our pensions?
A review could help you pay lower charges, help improve performance, or simply confirm that what you have got can’t be bettered, which would be great to know.
3. Tax efficient savings and investments
Have you got savings or investments not held in an ISA (Individual Savings Account)? If the answer is “yes” you are probably paying tax unnecessarily.
In the current tax year you can hold up to £11,280 in an ISA, of which up to half can be in a Cash ISA.
If you’ve not used your ISA allowance this year think about whether you should transfer your existing savings and investments into an ISA to benefit from the tax advantages.
Remember, the less tax you pay, the more your savings and investments will be worth.
4. Personal insurance
None of us are indestructible and whether it’s Life Cover, Critical Illness Cover or Income Replacement insurance most of us need to protect ourselves and our family from the financial affects of illness or worse, death.
Like making a will arranging insurance is never going to be at the top of everyone’s ‘to do list’, but it is hugely important, especially if you have debts or children.
So what put’s people off sorting out their insurance?
Firstly, and understandably, there’s the fear of being hard sold to by an insurance salesman, then the cost and finally talking about an unpleasant subject is never nice.
To quickly address these concerns.
Firstly the hard sell. Our advisers will tell you the advantages and disadvantages of each type of insurance, they will then explain the costs involved for each option and finally allow you to make your choice, safe in the knowledge that you have all the facts; we know how much a hard sell turns people off, we hate it ourselves.
When it comes to cost, protection doesn’t have to be hugely expensive. Even if you can’t afford to buy as much protection as perhaps you need, doing something is better than doing nothing.
As for discussing an unpleasant subject, our advisers are of course tactful and discrete, however there’s no getting away from the fact that discussing illness and death is never going to be pleasant.
5. Review children’s savings
We find that children’s savings are often neglected and even sometimes forgotten.
Parents and grandparents often start to save for children with the best of intentions, searching out the best savings interest rates and diligently putting money away in the form of a lump sum or monthly savings.
Then day to day life takes over, introductory bonus rates come to an end and we forget to shop around, meaning that money is often left languishing in savings accounts paying poor rates of interest.
If you have Child Trust Funds, Junior ISAs (Individual Savings Accounts) or just general savings accounts for your children or grandchildren, we’d recommend you revisit these accounts. Find out how much interest they are paying and compare with the best buy savings accounts currently available, you might be surprised by how much harder the savings could be working.
6. Make a will
We have regularly written about the importance of making a will.
It is the only way of making sure that your assets go to the people you want them to and it can also help to reduce Inheritance Tax (IHT).
If you have children, a will allows you to state who you would like the children to be cared for after your death.
Yes, making a will is never the nicest of jobs, no one likes to think about their own death, but it is a hugely important document and so easy, and dare we say, cheap, to do.
If you have assets or children and have not yet got round to it, then get on the case today!
Getting your finances in shape can be a lengthy job and you might not feel able to tackle all of the ideas we’ve come up with at once.
That’s fine, pick a couple and sort those out first, then come back to the others at a later date.
Of course, our team of Independent Financial Advisers are here to help you. If you need help getting your finances into shape why not call one of our IFAs today on 0115 933 8433? Alternatively enquire online or email email@example.com
Your property may be repossessed if you do not keep up repayments on your mortgage.
For providing mortgage advice we will charge an application fee of £299 and we may also be paid a fee from the lender, any fee paid by the lender will be disclosed to you. Alternatively we will charge an arrangement fee of 0.5% of the loan and refund to you any payment received by us from the lender.
The Financial Services Authority (FSA) does not regulate tax advice and will writing.