There’s been a lot to digest this year, both globally and at home. While keeping up to date with the UK cost of living crisis and events from across the continents, it wouldn’t be surprising if you’d let your financial housekeeping slip.
With the festive season now upon us, though, you might find that Christmas is a great time to get around to those small money matters you’ve been putting off all year.
Here are just seven tasks to tackle now, to get your finances shipshape ahead of the new year.
1. Find your lost pensions
Back in October, we looked at how to find your lost pension plans now… and why you should and in that article, we advocated for finding your lost pension schemes.
If you haven’t got around to this yet, maybe now is the time.
Back in September 2022, This is Money reported that £37 billion was currently sitting in lost or unclaimed pots. For many people, pensions get lost when they change jobs or addresses and don’t update the correct providers.
With the average worker expected to have 11 different jobs during their career, you could have several different workplace schemes, on top of any private pensions you hold.
If you have time off over Christmas, consider digging up your pension paperwork. You can also use the government’s pension tracing service to help you find the contact details for forgotten schemes.
2. Review your protection
Another important aspect of your overall financial strategy is insurance against the unexpected. It’s also an area where a change of job or circumstance could mean “lost” cover or gaps in your protection.
If you’ve ever had life cover or death in service benefits attached to your employment, do you know what happened to that cover when you changed jobs or retired?
While you’re looking for your pension paperwork, dig out your protection documents too.
You’ll want to ensure you are covered against sudden illness, accident, or death. If you find gaps in your cover, now is a great time to contact us. We help you to check your current cover against your needs and plug the gaps.
3. Revisit your household budget
Just as you’ll receive an annual review from your financial planner here at HA&W, why not conduct your own end-of-year financial review by revisiting your household budget?
List your incomings and outgoings for a typical month in 2023 and then look for areas where savings could be made. You might find forgotten and unused subscriptions or areas where you’re spending surprises you.
Cancel these services and cut back in these key areas to head into 2024 with more disposable cash to channel into the places that matter.
4. Check in with your savings
Conditions have been tough for savers at least as far back as the 2008 global financial crisis but rates are improving. While this may have left you tempted to ditch your investments in favour of a return to cash, this could be rash.
The balance of risk and return within your investment portfolio means that your money is likely to be best placed within your managed fund, but cash has its place too.
Check in with your savings to ensure you have a sufficient emergency fund in place and look to budget for topping it up if not.
Ideally, you should hold between three and six months of household income in an easy-access account to tide you over if the unexpected happens.
5. Get tax-year-end ready
It’s never too early to get end of tax year ready and one way to get on top of this task now is to review your allowances.
The pension Annual Allowance increased for the 2023/24 tax year to £60,000. You can contribute up to this amount while still receiving pension tax relief so check back through your contribution history and plan to contribute as close to this limit as you can.
Tax relief is applied automatically at 20% but as a higher- or additional-rate taxpayer, you can claim additional relief through your self-assessment tax return.
You’ll also want to maximise your ISA allowance. You can pay £20,000 into an ISA during the 2023/24 tax year and, like pensions, ISAs are incredibly tax-efficient.
You don’t pay tax on interest in your Cash ISA. Gains in a Stock and Shares ISA, meanwhile, are free of Income Tax and Capital Gains Tax.
6. Write or update your will
If you haven’t checked in with your will recently, do so now.
Life milestones as well as changes in circumstance can alter your priorities. The latter might include births, deaths, marriages or divorce.
It’s also worth considering a Lasting Power of Attorney (LPA) if you don’t already have one in place. An LPA allows you to choose a person you trust to look after your affair if you become incapable of doing so yourself.
Back in 2020, we wrote about the five reasons why you should put an LPA in place so refresh your memory if you’re thinking about the pros and cons.
7. Create an ICE document
Finally, if you’ve often considered making an In Case of Emergency (ICE) document but never quite found the time, maybe the post-Christmas lull is the perfect time.
Gather together all the important information someone would need to look after your affairs in the event of an emergency or death.
You can use it to provide details of:
- Your next of kin and their contact details
- The location of important documents
- Funeral arrangements and your wishes
- Your pension schemes and providers
- Bank and building society details.
Get in touch
If you need help to accomplish any of these financial housekeeping jobs this Christmas, get in touch now. Contact us now to find out how our Chartered financial planners could help you.
Please note
The value of your investment 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. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
