It can make you fearful of checking your bank balance, but by taking steps to future-proof your life and getting to know your finances – you can come out the other side feeling a lot more certain and confident, whatever stage you’re at.
Emma Maslin, finance blogger: “Set goals and measure how you are improving”
To get started, you need to know what you have, says finance blogger Emma Maslin (The Money Whisperer).
“With most things in life, we need a baseline to measure improvements against. When we start a fitness regime, we register our weight and take measurements of different parts of our body – and check in over time.
“It’s the same when you approach your finances. You need to know your starting position to be able to set goals and measure how you are improving.”
Take control of any debt and find your balance
Spending less, tackling your bills and trying to get the best possible deals can make a big difference.
Money saving websites offer great ways to cut your spending, for example by getting a better mortgage rate or switching energy provider.
The savings can all add up. One of our MoneyPlus writers has just gained a windfall £600 a month through an early financial spring clean – and is saving some of that into ISAs to fund her children’s education.
Get into the saving habit
Even putting a small amount aside regularly for a rainy day can help cover any unexpected costs.
Want to save for something bigger? An ISA is one way to help you save tax efficiently. Whether it’s in a Cash ISA or invested in a Stocks and Shares one, you can save up to £20k this tax year, which ends on 5 April and the same for next tax year. You don’t pay tax on interest or any gains you make.
As a Stocks and Shares ISA is an investment, its value can go down as well as up and may be worth less than was paid in.
You can read more in our article What’s an ISA, who are they for and when should I consider one? [link]
Make this the year to get your pension sorted
We all want to be free to do what we want to do in retirement, so plan for it.
Get a view of what you have in your pension pots and see how they’re all performing. If you’re not sure whether what you’ve got will provide the retirement income you need, our simple pension calculator may help you.
If, like many of us, you’ve accumulated a few pensions during your working life, calculating what you have can be more difficult. Putting all your pension savings in one place could make it easier to check and manage.
Bringing your pensions together will not be right for everyone. You need to consider all the facts and decide if it is right for you.
You can read more in our article on bringing your pensions together.
You may want to talk to your adviser before making any decision, who will charge for this advice. If you don’t have one, visit Standard Life Aberdeen’s financial planning arm, 1825 or find an adviser in your area with unbiased.co.uk. For free and impartial guidance try the Money Advice Service.
Future-proof for your friends and family
Where there’s a Will, there’s the peace of mind that the right people, or charities, will benefit how you want them to when you die.
Yet 60% of UK adults don’t have one and that figure is increasing, according to Yourmoney.com.
“In spite of having dependants and major financial commitments, three quarters [of the 35-54 age group] have not laid out how they want their assets to be distributed.”
One really important consideration is that your pension savings are not covered by your Will. You need to make sure your pension provider knows who you want to benefit from your pension savings by completing and sending them your nominated beneficiary form. They will take this into account when deciding who to pay your pension savings to. Remember to keep those nominations up to date, if your family circumstances change.
Read our 8 reasons why a will is important for more.
Always check you’re claiming all you’re due
Are you one of the one million married couples missing out on a little known tax allowance, as reported by Money Saving Expert?***
The Marriage Allowance could be worth up to £238 this tax year, and you can claim for the past three years too. If you’re eligible, that means you could get around £900 back.
The Marriage Allowance works where one half of a couple has an income that is less than their tax-free Personal Allowance (£11,850 in 2018/19). They can choose to transfer part of this (£1190 in 2019) to their spouse or civil partner (who must earn below the higher rate tax threshold to qualify).
This allows the spouse to use this to reduce their tax. The allowance can currently be backdated until 2015/16 if you haven’t previously claimed.
One of the Standard Life team tested this out this month, and in less than 15 minutes online, claimed back several hundred pounds.
You can find out more and apply at http://www.gov.uk/apply-marriage-allowance. Tax rates and thresholds are different in Scotland but the same principle applies.
Look to the future
So, instead of worrying about finding out what shape your finances are in, it makes sense to take some steps now to future-proof your future life. With your finances in better shape you can start looking forward with confidence instead.
Elle Tucker is a freelance journalist working on behalf of Standard Life
Tax and legislation may change and the information here is based on our understanding in February 2019 and shouldn’t be regarded as financial advice. Your own circumstances will have an impact on your tax treatment.
As with all investments, the value can go down as well as up and you could get back less than paid in.
* Do you have FOFO? Barclays Bank, October 2018
** 60% of people don’t have a will, Yourmoney.com report on research by Unbiased.co.uk, February 2018
*** Marriage Tax Allowance, Money Saving Expert, February 2019