Now that the New Year is upon us, and the excesses of the festive season are fading into memories, it is a good time to make some financial plans for the next 12 months (or so). In this first article of 2010, I thought it might be a good idea to give a few financial tips, to improve your personal wealth to some degree. It is worth my saying, from the outset, that I think this year will again be a difficult one for many, but some money making and saving ideas should be of use to most of us.
Firstly, don’t let financial institutions get away with anything: they make quite enough money as it is. If you carry a balance on your credit card(s), try looking at switching to a card that has a 0% interest period for as long as possible. Pay as much as you can afford off the account each month, as outside interest-free periods, it is an expensive way to borrow. Review your account at the end of the incentive period. If you pay off your balance every month, you might consider taking one of the ‘cash-back’ cards that pay you back a percentage of everything you spend, each month.
Saving money for the future is an eminently sensible thing to do, but for anyone who has any form of borrowing (certainly any borrowing at an interest rate of, say, 4% or more) the objective should be to repay as much as possible. It is almost inconceivable that there are people stashing away money, on which they are earning 1% to 2% a year, yet paying anything from 15% to 30% on credit or store card balances, yet thousands are! Whilst maintaining minimum payments where applicable, pay as much as you can off the debt with the highest interest rate, until it is cleared, then move on to the next.
Check the cost of your utilities, if you can, with a cost comparison website. If you have a mobile phone, internet access or home telephone, check with your provider at the end of each contract period, to see if you are on the best tariff. If you wish, consider switching providers to get a better deal. If you have a bank account for which you pay a monthly fee, check what ‘extras’ you get for your fee. Then make sure you do not duplicate any of these benefits. (I recently found that I had been paying for both mobile phone, and travel insurance, when both were covered as part of my current account package!).
I am generally a fan of regularly checking the cost of insurance, but it is fair to say that having a good ‘track record’ with an insurer can prove very useful, in the event of a claim. The cheapest is not always the best. The value is what is important. On the subject of insurance, it is a good time to check the cost of your life cover. It is cheaper than it has been for a quarter of a century, yet on average, insurers pay out some 50% more in claims, than they collect in premiums: surely a sign that such premiums will be reviewed, given these difficult times, and an increase could be on the cards. I have reviewed several cases of late, and reduced clients’ costs by a reasonable margin. If you have family or business commitments to protect, and have no cover, then now is a good time to buy.
As regards medium to long-term saving, I am reasonably positive about 2010, but would still advocate spreading investments by way of monthly saving schemes, if you have concerns about the markets.
I wish you all a happy, healthy and financially fitter New Year!