Holiday season usually puts a big stretch on people’s finances. In today’s post we give a few simple moves you can make to ease that pressure and set you up well for the new year. Assuming you have paid off expensive debt already (if not, try to do that first – other people’s money is always expensive), here are our top tips for moves to make THIS year.
1) Make sure that you aren’t too stretched during the holiday season. Try to put a little money away every week, so that you aren’t left in debt at the end, but are paying out of savings. Once you’re in the habit, you should be able to continue this into the New Year – setting yourself up for financial health in 2017.
2) Do you have a rainy day fund? The government advises that everyone should have 3-6 months salary saved away in case of problems – redundancy, or a major expense. Of course for many people on low incomes this is incredibly difficult to achieve – but every little will help. Even a small fund of £200 would cover you for expenses such as an oven or washing machine breaking down, or car problems. A rainy day fund gives you security and flexibility.
3) Maximise your pension contributions. If you have money left over after paying off debt, creating a rainy day fund, and saving up for the holiday seasons, saving into a pension is a great idea. Many of us have not made adequate provision for our retirement. If you have an occupational or workplace pension, put in the maximum you can afford – your employer must match, and the government tax relief increases your pot significantly. Start early enough, and compound interest will really boost your pension pot. If you don’t have a workplace pension, investigate private schemes and start paying in the maximum you can afford.
4) If you’re self-employed, get your taxes sorted well before the January 31st deadline. That way, you’ll know how much you have available for the holiday season – and you won’t be surprised by a huge bill just when you are least able to pay it.
5) Switch bank accounts. It feels like a pain but the new faster switches are making this far easier to do. With interest rates at historic lows, shopping around will boost your finances significantly. ISAs have become less attractive with the new tax-free interest allowance, but there are bank accounts that pay good interest on either a minimum balance, or a regular minimum payment. From less than 1%, you could be making 3-6% on your money.