As we enter the Chinese Year of the Snake, it’s the perfect moment to bring intelligence and transformation into your financial life.
Just as the snake sheds its skin, this year offers an opportunity to let go of outdated habits and adopt a refreshed approach to personal finances.
There’s no better time to evaluate your financial health, address lingering concerns and turn long-considered ideas into action. The wisdom and adaptability symbolised by the snake can inspire a fresh start for your financial future.
COST-OF-LIVING
The ongoing cost-of-living pressures remain a challenge for many across the UK. Yet, the start of a new year is an excellent opportunity to take charge of your finances and set realistic, empowering goals.
While financial worries can feel overwhelming, breaking them down into manageable steps can help reduce stress and build confidence in your financial journey.
Emma Sterland, Chief Financial Planning Director at Evelyn Partners, highlights the importance of reflection.
“Our circumstances and needs change constantly, so it’s important to pause and take stock,” she says. “Some steps are ‘low-hanging fruit’ that can be enacted or set in motion with an hour on the laptop, while others might require ongoing efforts. But all are achievable, practical actions that can be a refreshing alternative to daunting New Year resolutions.”
Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group, recommends a three-step approach to financial planning.
“First, tackle any debt to keep it manageable,” he says. “Second, create or revisit a household budget to navigate everyday expenses.
“Finally, consider saving or investing for both short- and long-term goals wherever possible.”
For those worried about debt, resources and charities like Money Helper and StepChange can provide valuable assistance.
HOUSEHOLD BUDGET
“Creating a realistic budget can help you prioritise essential spending and spot areas to save,” says Ambery. “With relatively high interest rates and persistent inflation, particularly around energy costs, regularly reviewing your budget ensures it’s still working for you.”
Budgeting apps and online resources from the likes of Citizens Advice can be particularly helpful, providing insights into spending habits and categorising expenses to identify potential savings.
SAVINGS GOALS
“If your budget allows, aim to set clear savings goals,” Ambery advises. “Start by building an emergency fund to cover unexpected costs, such as car repairs or appliance breakdowns. Once you have this buffer, consider longer-term savings options.”
With best-buy savings account interest rates currently outpacing inflation, it’s an ideal time to explore fixed-rate accounts or tax-efficient options like cash ISAs.
WRITE A WILL
While writing a will might not be the cheeriest start to the year, it’s an essential task that many overlook. Over half of UK adults lack a will, leaving their financial wishes uncertain.
Charlene Young, pensions and savings expert at AJ Bell, warns of common misconceptions.
“Many people wrongly assume their assets will go to certain individuals when they die. Ensuring your affairs are in order is crucial, especially with blended families or cohabiting partners who might not be entitled to your estate without legal provisions.”
And Young stresses the importance of proper planning.
“For example, if you’re not married, your partner won’t automatically inherit your estate, regardless of how long you’ve been together. This is particularly important if you own the home your partner or stepchildren live in.”
A will can be created using DIY kits available both online and in the High Street or through a professional, which is advisable for more complex situations.
Young adds: “While the DIY route might seem appealing, it’s essential to ensure your will is legally binding to avoid complications.”
Don’t let the Year of the Snake slip through your financial fingers. By addressing key areas like budgeting, savings, and estate planning, you can lay the foundation for a more secure financial future, embracing the wisdom and renewal this year symbolises.
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