It’s that time of year when we all like to have a good clear out but when it comes to your annual spring clean, don’t forget to take a look at your finances, says SeventySeven Wealth Management’s Eloise Hammond.
Things are slowly but surely getting back to ‘normal’, children have returned to school and with the vaccine roll out and an end to lockdown restrictions in sight, there’s a sense of renewed optimism in the air.
Before long, our work and social diaries will start filling up again and that list of tasks you compiled at the beginning of lockdown will be pushed to the bottom of the ‘to-do’ list once again in favour of, let’s face it, more exciting activities.
So why not spend some time over the coming weeks spring cleaning your finances? It’s a positive step you can take towards a brighter financial future and, broken down, isn’t as daunting as you might expect.
Examine your household income and expenditure so you can see where you might be overspending and where you can cut back. This is money you could save, use to top-up your pension or emergency fund – we recommend that you have circa three to six months of expenditure available to cover any unexpected expenses or changes in circumstances that might require a shift in your financial focus.
If you’re self-employed gather together all your receipts and paperwork for 2020-2021. It might feel like you’ve only just dealt with 2019-2020’s self-assessment, but getting everything together as early as possible avoids a headache later on in the year when accountants are generally busier. You don’t have to pay your tax bill until January 31st next year but there’s no harm in filing your self-assessment early.
With us having now entered the new tax year, it is never too early to make the most of your 2021-2022 ISA allowance. You can pay £20,000 annually into an ISA and will pay no Income Tax on any income you receive. Any profits are also free of Capital Gains Tax. Make sure you’ve also made the most of your Capital Gains tax-free allowance, which for 2021-22, is £12,300.
If you have any excess income, what are you doing with it? Where is your saving pot held and is it in a place that maximises its potential? If your savings have been languishing in a low AER account, now maybe the time to get them out and make them work harder. Seek advice from a financial planner to find out what schemes will work best for you. If you already seek help from an advisor, ask yourself why and how they are managing your money. A regulated financial adviser will always check in with you regularly to assess your circumstances and ensure your savings, pensions and investments are in the best place for you.
The value of an investment with St. St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
An investment in equities does not provide the security of capital associated with a deposit account with a bank or building society, as the value & income may fall as well as rise.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.