The new year is a great time to think about everything you’d like to achieve over the coming 12 months.
Whatever your goals are for 2024, a financial new year resolution can help you to achieve them. So, read on to discover seven ideas to help you start.
1. Pay off expensive debt
As interest rates have risen over the past two years, the cost of borrowing has also increased. Often, the most expensive forms of debt are credit cards and overdrafts.
Sometimes, it can make more sense to pay off debt than to add to your savings. This is because the interest rate charged on what you owe might outstrip what you can earn on savings accounts.
MoneySavingExpert shares the following example to demonstrate why paying off debt before saving can be beneficial:
- £1,000 debt on a credit card at 23% costs £230 in interest over a year
- £1,000 saved in a savings account at 5% earns £50 in interest over a year
- So, if you pay off the debt with the savings, you could be £180 a year better off.
There are a couple of important exceptions to this.
The above assertion may not apply if the debt has an early repayment charge or if the interest rate on your debt is especially low – this is particularly true if the interest on your debt is lower than the interest rate you’re gaining on your savings.
To determine the most sensible course of action for you, it could help to consult a financial planner for guidance.
2. Review your savings accounts to make the most of interest rate rises
Of course, while rising interest rates have been difficult for borrowers, some savers have enjoyed greater interest on their savings.
Not all banks have passed on the interest rate increases to the same degree though, and according to a report from FTAdviser, 32% of savers don’t know what rate they’re receiving on their savings.
So, if building your savings is a priority for you, it could be helpful to take time this year to review the rates you’re receiving on your savings and shop around to see if you could profit from a better deal.
3. Set up a regular monthly contribution to your savings or investment account
Often, savers will transfer what’s left from their income after their bills are paid and they’ve come to the end of the month.
It might be more beneficial to set up a regular contribution to your savings or investments immediately after you’ve received your monthly income. This could help you to:
- Budget more effectively
- Contribute to your savings or investments more consistently
- Progress towards your financial goals more quickly.
4. Write or review your will
It’s not a pleasant topic to think about, but writing a will is a vital part of your estate plan. If you were to die without a will in place, your assets would be distributed according to the laws of intestacy.
Not only does this not consider your wishes, but it can also create long delays because the case must go through the courts.
By taking a little bit of time this year to review your will, or write one if you haven’t yet, you can put your mind at rest about what would happen to your estate after you die. This could also help your family, as an up-to-date will can help to make the process of distributing your estate after you pass away much more straightforward.
5. Track down any lost pensions
Since the introduction of auto-enrolment in 2012, you may have accumulated multiple pensions if you’ve worked for different companies. This can make it trickier to keep track of all your pension pots.
PensionsAge reports that there are an estimated 1.6 million lost pension pots in the UK, worth a combined total of around £37 billion. As such, the average lost pension pot could contain around £23,000.
So, tracking down any lost pensions could significantly boost your retirement savings.
If you’re not sure where to start, the government’s pension tracing service can help you to discover the contact details for your pension providers.
When you have discovered this for each of your pension pots, you just need to log in and update your contact details, remembering to resolve to do the same each time you move house or start a new job.
6. Make the most of your tax allowances
The 2023/24 tax year ends on Friday 5 April, and there are a few tax allowances that will reset on this date. That means that if you haven’t used them, you’ll lose them.
Here are some of the tax allowances to be aware of that could help you to reduce your tax bill for the year:
- ISA Allowance: You can deposit up to £20,000 into a Cash or Stocks and Shares ISA in 2023/24.
- Dividend Allowance: You can take up to £1,000 in income from dividends in 2023/24 before the income could be liable for tax. The rate of Income Tax you pay on dividend income above this threshold will depend on your marginal rate. Note that the Dividend Allowance will fall to £500 in 2024/25.
- Capital Gains Tax (CGT) Annual Exempt Amount: CGT is payable when you sell certain types of assets and make a profit above the Annual Exempt Amount (£6,000 in 2023/24). This includes stocks and shares, property that isn’t your primary residence, and personal possessions excluding your car. The Annual Exempt Amount will fall to £3,000 in 2024/25.
7. Book a meeting with your planner
According to research by Standard Life, working with a financial planner has many financial and emotional benefits. For example, people who have taken financial advice:
- Expect to retire around three years earlier on average than people who have not taken advice
- Believe they’ll be able to fund their retirement lifestyle for 23 years, compared to 17 years for people who have not taken advice
- Are more likely to enjoy their retirement.
Your planner can help you to consider your long-term financial goals and ensure you have a financial plan in place that will help you to achieve them. So, booking a meeting with your planner can be a helpful step towards greater financial wellbeing this year.
Get in touch
If you’d like to learn more about how we can help you to achieve your financial goals in 2024, please get in touch. Email admin@stonegatewealth.co.uk or call us on 01785 876222.
Please note
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
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