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"Turn over a new financial leaf this year by getting your personal finances in order and planning ahead. Look closely at your expenditure against your earnings and think about where you can cut back and put more towards your financial goals, be it a mortgage, savings, pension, or provisions for your family. An independent financial adviser can help you get your finances in order and develop a plan for managing your money and investments. Only an IFA can advise you on the best products for you from across the whole of the market. To find a qualified, local adviser near you search on Unbiased.co.uk’s free and confidential ‘find an IFA’ service.
"To give you a helping hand with planning your monthly finances, download Unbiased.co.uk’s financial calendar. Simply add in all of your important financial dates and create your own financial planner – enabling you to see when all of your future payments are due throughout the year and giving you helpful reminders so you can plan ahead. The calendar can sit on your desktop for you to revisit and update at any time."
2. Danny Cox, Hargreaves Lansdown – TAKE CONTROL OF YOUR FINANCES
"It may seem obvious, but take control of your money – don’t let your money control you! Perhaps the simplest way to control your money and spending is to write down everything you spend. It is amazing how much more disciplined you can be with your money if you write down and take in where all the money goes. This list can form an easy budget, helping you to understand when bills might become due and you can learn how to plan for them. When writing down what you spend your money on, categorise each item. i.e. ‘essential’ (e.g. rent, food), ‘important but not essential’ (e.g. mobile phone, car costs), then ‘luxury’ (going out, DVDs, Starbucks etc). Shop around to save money on your essential spending. Where possible, cut back on your important and luxury spending and soon there may be some surplus, allowing you to pay down debt or perhaps start to save."
3. Dan Clayden, Clayden Associates – UNDERSTAND YOUR TAXES
"This new year heralds a new era of higher taxation, as we see the introduction of ‘Super’ tax for those earning over £150,000, the phased withdrawal of income tax personal allowances if your earnings exceed £100,000 and the reduction of tax relief on pension contributions for anyone earning over £130,000 in a year. These conditions make appropriate tax wrapper selection vital, as it can not only significantly effect investment returns, but also have a huge impact on an individual’s overall liability of tax.
"Also as investment markets are poised to recover, it is a crucial time to review investments (whatever tax wrapper they’re held in) to ensure that they’re in the best position to catch the wave of recovery … and not get left behind. This is even more important as the possibility of seeing inflation rise again becomes more likely as higher fuel prices start to impact and interest rates no doubt increase from the historically low rates we are currently experiencing."
4. Anna Sofat, Addidi Wealth Management – GIVE SOMETHING UP
"We all plan to give up something in the new year, be it smoking, drinking, over eating or shopping… Whatever you’re planning to cut back on, use the monetary saving to put towards a goal in the future, such as building a savings pot, a summer holiday or even covering the cost of next Christmas. You will be surprised by how much you can save from these small cutbacks. For example, if you currently smoke ten cigarettes a day, you spend around £76.04 per month, totalling £912.50 per annum (if a pack of 20 costs £5 and you buy one pack every other day).
"If you put your annual saving of £912.50 in a 2 per cent interest account, you would earn £922.43 over one year, £1,863.47 over two years and £2,823.51 over three years. If you earned 4 per cent interest, it would give you £932.49, £1,902.98 or £2,913 over the same time periods. If you stick to this resolution and manage to stash it away for 10 years, not only will you have given your health a huge boost but you will have saved £11,234.20!"
5. Mel Kenny, Radcliffe & Newlands – EMPLOYEE BENEFITS
"Let your employer know how much you value the employee benefits they provide and, should you be in a position to, explain that you may be willing to exchange salary for tax efficient benefits. Companies are looking to cuts costs and, with many people feeling lucky to have a job at all, might question the value of providing employee benefits if employees do not appreciate their value. Also, with income tax and national insurance on the rise – together with the increasing need to provide long term financial security – employee benefits represent a tax efficient solution to enhance an employee’s overall remuneration package. One tax efficient example of restructuring pay would be to convert a portion of salary into an employer pension contribution. Both employee and employer save national insurance on that contribution and the employer may give back all or part of its 12.8 per cent saving. From April 2011, the saving will rise to 13.8 per cent."
6. Adrian Lowcock, Bestinvest – PRIORITISE YOUR DEBTS
"When taking stock of your financial position, you should always prioritise paying off your debts. Not all debt is created equal. Make a list of your liabilities and organise them by the interest rate. Those with the highest rates of interest should be paid off immediately. These are usually credit cards, overdrafts and short term loans. (Longer term debt such as mortgages is generally cheaper than short term debt, but still has a cost and should be a crucial factor when planning your finances). It does no good to invest money elsewhere whilst you are paying 19 per cent+ interest each year. The most beneficial change to your personal finances you can make is to clear your existing debts and have a clean slate upon which to focus your financial goals for the future."
7. Alan Dick, Forty Two Wealth Management – WORK OUT YOUR ‘NET WORTH’
"At the start of the year, sit down and look at your income and expenditure and from there create a short, medium and long term spending plan. Next, gather all your financial documentation in one place and make a note of your ‘Net Worth’ – this is the difference between all of your assets (property, bank accounts, pension plans and any other investments) and your liabilities (mortgage, personal loans, credit cards etc). Once you have a clear understanding of your current income and expenditure and your Net Worth, you can start to "look under the bonnet" of your various investments to gain a better understanding of how these will help you achieve your personal financial goals. A full investment review should include analysis of the risk and reward profile of your portfolio and put this in the context of your own personal preferences and requirements. It should also include a detailed analysis of the level of charges being taken from your account. A qualified, independent financial adviser will be able to talk you through this as well as help you realise your goals for the year ahead and beyond."
8. Arnold Wills, Jelf Private Clients – INHERITANCE TAX
"For those in a privileged financial position, take the time to look carefully at your Inheritance Tax needs. Map out your income versus expenditure and if you wish to take some steps towards saving on future inheritance tax, take advantage of the rarely used excess income opportunities. Broadly speaking, excess income (not including capital withdrawals from Investment Bonds) can be given away. Subject to certain conditions, this gift is free of IHT immediately and regular IHT gifts could potentially fund whole of life insurance for the sum assured to fall to your beneficiaries without the need for Probate. Or perhaps you could make contributions to your children’s or grandchildren’s stakeholder pensions. You pay it net of basic tax and they get the relief. Non earners can have contributions up to £3,000 net grossed up to £3,600. You could also help build up funds in your grandchildren’s names for their education. The interest is theirs if paid directly to them, and they each have their own personal tax allowance. An independent financial adviser can help you understand the rules around IHT as well as plan how you can make IHT gifts in the future."
9. Jason Witcombe, Evolve Financial Planning – SAYE SCHEMES
"Join your employer’s ‘save as you earn scheme’. Offering employees share option schemes is an increasingly popular way of giving workers a stake in the companies they work for. Many large firms will offer SAYE or "Sharesave" schemes. These allow employees to save between £5 and £250 per month for three, five or seven years. Employees also get a tax-free bonus if they complete the savings plan. Employers grant employees an option at outset. At the end of the period, employees choose either to use the money saved, plus the bonus and interest, to buy shares, if buying the shares would generate a profit, or have their contributions returned plus interest, if this would give the higher return. SAYE schemes offer huge upside potential with very minimal risk. Essentially, if the share price falls during the period, you will still get your savings back plus a tax-free bonus so the only "risk" is the fact that you could have received a slightly higher return through a conventional savings account."
10. Peter McGahan, Worldwide Financial Planning – UNDERSTAND ADVICE
"If you plan to seek independent financial guidance next year, be clear on the advice you’re getting and how you are going to pay for it. Everyone can choose to pay their IFA by a fee rather than commission, and how financial advisers are paid is currently under review as part of the FSA’s Retail Distribution Review. Some would argue that advisers can be swayed by commission and for this reason it is worth exploring the benefits of approaching a fee based independent financial adviser to see how they can save you money and to experience the advice that is given. For example, a commission based adviser may recommend investing in an investment bond which pays 7 per cent commission when other more tax efficient solutions might only pay 3 per cent. In such cases, the total costs to the consumer can total nearly 11 per cent; whereas a customer visiting a fee based independent financial adviser is likely to have saved that 11 per cent and paid a fee in the margin of 2-3 per cent. Do your research before taking out any product recommended by an adviser and understand the charges involved."
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