Happy New Tax Year, friends! I hope you have a wonderful year filled with wealth and happiness.
Make this year better than the last by turning over a new leaf and setting yourself some personal finance goals for the next 12 months.
I’ve included 5 suggestions below to inspire you to get started. If times are tight and you don’t think you’ll be able to do them all at once, there’s no reason why you can’t pick and choose the ones that are most achievable.
If you decide to set yourself completely different money goals for the 2016/17 financial year, let me know your plans in the comments at the bottom of this post!
Start saving for retirement
Retirement seems so far away and as a result, many young people are failing to save for old age. Whether you’re 18 or 25, it’s never too early to start saving. In fact, the earlier you start the better. Those that start saving at an early age can sit back after 10 years or so and watch their savings grow thanks to compound interest alone – without them having to keep depositing more money in the account.
You might also like: Should We Start Saving For Retirement In Our Twenties?
The best way to save for retirement involves starting a workplace pension. You’ll get tax relief from the government and your employer will contribute to your retirement fund too. The amount you get from your employer will depend on their generosity and often the company’s size. Large corporations often offer employers shockingly generous pensions that are hard to refuse.
For more information about pensions, take a look at my pensions guide.
Begin an emergency fund
A quarter of Britons have no money set aside for a rainy day and a third rely on credit cards in the event of an emergency.
If you live pay cheque to pay cheque and unexpected expenses see you breaking into a sweat, make this the financial year you save an emergency fund. After all, if you were to lose your job, your car was to break down, or you found out you were pregnant, a stash of cash at your side would be a great help.
Track your spending
Everyone thinks they know exactly where their money goes but if that was really the case, many of us would probably be financially better off. By tracking your spending and writing down every single thing you buy, you can gain an accurate insight into where you money disappears to each month. Some of your expenses may surprise you.
I recently started tracking my spending and the amount of snacks I buy is ridiculous!
Make the most of interest
If you’re not already saving your money in accounts that offer you a good return on your money (in the form of interest), make this the tax year that you maximise your savings.
Switching to a different account may seem like hassle but it doesn’t take long and most providers will do all the hard work for you. Once you’ve moved your cash, you can sit back and watch the interest pour in… okay, trickle in.
Don’t think of bank accounts as simply a way to store your money. Think of them as a way to grow your money.
Find the right ISA for you
For a long time traditional Cash ISAs were considered the go-to place for saving money but with interest rates on these tax-free accounts at an all-time-low, they’re no longer as rewarding as they used to be. Besides, with new tax rules stating that savers can earn up to £1,000 of interest tax-free each year, most of us are unlikely to pay tax on our savings now anyway.
However, there are other options available that offer you a much more rewarding return. If you’re saving for a house, for example, the Help to Buy ISA is pretty much a no-brainer. For every £200 you save, the government will top up your deposit fund with an extra £50. It’s essentially free money. And if you get your Help to Buy ISA with Halifax or Santander, you’ll also benefit from a whopping 4% interest.
If you’re happy to take a bit of a risk with your savings, you could start investing your cash with the help of a Stocks and Shares ISA. [More on this another day]
