Happy New Year!
As we come into 2025 we face a brand new calendar year but we still have around 3 months left of the financial year.
What relevance is that, to you?
Well, you don’t have to be self-employed to take advantages of allowances which reset every financial year. Also, you could use the new year as an opportunity to “spring clean” your finances. When you put the Christmas tree away, I’m sure you probably give the room a good vacuum to get rid of any last evidence of glitter or tinsel.
So what can you do this January to get off to a flying start?
🔔 Credit Cards
It’s possible you may have put more than usual onto your credit cards over the Christmas period.
If you’re not able to pay them all off in full, create a strategy to repay them.
Check the interest rate applicable to ALL revolving credit facilities you have open. By this I mean credit cards AND store cards.
Could you do a transfer of credit onto a zero % interest card? If so, transfer as much as you can, transferring from the highest interest card initially.
Decide a realistic monthly figure you can afford to pay each month against all of your credit cards.
Prioritise the account with the highest interest. Make sure you make the MINIMUM payment on anything else and pay as much as you can off the highest interest account. Do this every month until it’s paid off. Then do the same exercise with the remaining accounts. It’s important to KEEP UP your original budget for monthly payments, even after the highest interest rate card is paid off. This will mean you pay off MORE against the next highest interest rate and it will be paid off quicker. Keep this up until you have repaid all your debt.
🔔 Emergency Fund
Have you made provision for an emergency fund which is easily (instantly) accessible? This is literally in the case of emergency: unexpected loss of income for a period of time or the unexpected breakdown of something you can’t live without such as your car, or home appliance. Ideally between 3-6 months of your outgoings.
If you don’t already have such a fund, make a start. Putting small amounts regularly away somewhere other than your everyday bank account will make a big difference and is more achievable than “finding” that amount of money in a lump sum.
If you already have an emergency fund, where is it held? If it’s in your normal bank account move it to somewhere you can’t easily spend it, accidentally.
Also, if it’s in a non-interest bearing account why not check what instant access accounts you could put it into. Any interest you can achieve is good interest!
🔔 Paperwork
Paperwork is probably the worst job in the world but if you schedule a couple of hours you’ll probably break the back of it.
💡 If you have paper bank statements, credit card statements or other paperwork, go through them and shred anything dated before April 2024 (make sure you’ve done your tax return for 2024 before you do this!)
💡Before you shred your statements, scan your eye across the direct debits. Are you paying for anything you don’t use? Are you paying twice for anything? Don’t forget to cross reference your joint account (it’s possible you could be paying for the same thing but out of 2 separate bank accounts).
💡 Contract renewals: when are your mortgages, insurances, phone contracts, utility contracts due to be renewed? If any of them run out this year, put dates into your calendar: review options available to you so you’re on the best possible rate when you renew.
🔔 Grown up stuff
Is your will up to date? Have your personal circumstances changed? Don’t forget that if you have a will and it names a spouse you’re not yet divorced from, this will still be valid.
Is your financial protection up to date? If you have life insurance to cover a mortgage which you’ve increased recently, or if you have income protection to cover income and you’ve had a pay rise recently, you may NOT HAVE ENOUGH COVER.
🔔 Gifts
Don’t forget you have a £3,000 ANNUAL EXEMPTION allowance for one off gifts. This means you could give one person or a number of people a gift of up to £3,000 this financial year which will immediately be exempt from a potential inheritance tax liability.
In addition, you have a SMALL GIFT allowance of £250 per person. You can gift as many people as you wish, up to £250 per year as long as they have not already benefitted from a gift within your annual exemption.
In addition, any regular gifts you set up from your “normal income”* will be immediately outside of your estate from the perspective of inheritance tax. So you could, for example, set up a regular ISA contribution for children or grandchildren, please note that these must be set up by a parent or legal guardian, but after that, anybody can contribute.
*being affordable with your ”normal income” means that this regular payment is affordable from the income you receive every month (whether it be earned income or pension income), rather than being taken from your savings.
🔔 Pension Admin
Whether you’re self-employed or employed, you may have a track record of previous employment. If you have, you may have previous workplace pension schemes. Why not gather up whatever information you can about these schemes and consider whether they are still meeting your objectives and are in line with your risk profile.
If you need any help with any of the above, please do get in touch as I may be able to help.
Happy (Organised!) New Year
Heide x
The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
Will writing involves the referral to a service that is separate and distinct from those offered by St. James's Place. Wills are not regulated by the Financial Conduct Authority.
