Spending time over the festive holidays to tackle your financial situation might not sound like the most enjoyable use of your break.
It’s not something you’ll see on an advent calendar or Christmas card, after all. But the festive period is for many people the longest break they’ll have had for a while. And the way the Bank Holidays fall – with Christmas Day, Boxing Day and New Years Day all in midweek – creates the opportunity for two weeks off with minimal annual leave taken.
So, the holiday period represents a chance to tackle some of the jobs that you’ve been putting off. And with the new year offering the promise of a fresh start, it’s a good time to assess the state of play with your finances and identify any changes you need to make. Here are a few pointers to take on board as you set about sorting out your finances.
Take a snapshot
The best place to start is to see where you’re at right now. Check your bank accounts, any debts (such as credit cards), savings and any investments to get a picture of what you have and where any gaps might be.
Then consider addressing any gaps or issues that have appeared during the year. If you have debts to repay, this should be your priority. The most expensive debts might be credit cards and unsecured loans, and these should be tackled first, even if you can just reduce the amount outstanding. If you’re worried about your debts, get help now. Free and impartial debt advice is available from organisations including Citizens Advice, National Debtline and StepChange.
Review your budget
The process of checking your finances and getting them in shape will be much easier if you have a budget that helps you track what’s coming in and where your money’s going. These days there are various money management tools and apps to help with this. One option is MoneyHelper’s free online budget planner, while there are also a number of money saving apps everyone should have that allows you to monitor, manage and save money more easily.
Cut your household bills
When you cast your eye over your bank statements there’s a good chance you noticed some hefty regular bill payments going out. It’s well documented that energy bills are still rising, but the cost of broadband, TV, mobile phones and other contracts can mount up quickly too.
If you haven’t changed energy supplier for a while you might be able to switch to a cheaper tariff. The same applies to broadband, mobile phone and insurance contracts as well, though you may need to wait until your existing deals end. Make a note of your renewal dates and shop around quickly before automatically renewing – loyalty doesn’t always pay.
When it comes to phone, TV and broadband you might be better off with a bundle from the same provider. But bear in mind that this means tying yourself into a contract for all those services. Streaming services such as Netflix, Apple, Disney+ and Amazon Prime have edged up in price too. If you’re still using them all, see if you’re able to switch into a lower cost tier or package.
Find an inflation-beating cash account
Interest rates may be on the way down – slowly – but there’s still value to be found among cash savings accounts. If your money is in an account paying less than the rate of inflation, it’s losing value. While some of the best deals have been withdrawn, there are still plenty of accounts paying around 5% or near enough. Make sure you know how to make your cash work as hard as possible.
Look to the longer term
When it comes to saving and investing for the long-term, pensions and stockmarket-based investments will typically give you the best chance of growing your money. If your employer offers you a workplace pension but you don’t take advantage of it, you’re missing out on both tax relief and the contributions that your employer will pay in.
If you’re able to squirrel away £25 a month or more and leave it there for at least five years, set up a investment stocks and shares ISA if you haven’t already done so. Read our guide on the steps for beginners to take when investing. If you’ve already got an investment portfolio running, set aside a few minutes to see how it’s getting on. Find out how to review your portfolio in 10 easy steps.
There are plenty of resources out there for learning about investing and researching your options, including the articles on our website. Our free and easy-to-use comparison tools are a good place to start.
Image by freepik
