January represents a fresh start for Britons, following a festive spending season. As the calendar rolls over, all eyes turn to financial matters. In most households, the first order of business in the new year is clearing seasonal debt built-up during the holidays. While the first part of the year may indeed be a time to repair your finances, there are many months looming ahead in 2018. What are the next steps toward a prosperous new year?
If you share spending habits with your mates and neighbors, many of whom overspent this year, it could take as long as six months for you to pay off your holiday balances. Although paying down seasonal debt is an important priority, the rest of your financial responsibilities need attention, too. For a better bottom line, don’t lose sight of the big picture and consider the following financial strategies to make 2018 your best year yet.
Manage Your Pension
Changes to pension rules and general economic shifts both have an impact on your retirement planning. Your pension serves as a vital income stream after you’ve left the work force, so it’s essential to make the most of the investment during your working years. It is thought an adjustment to the annual allowance may be on the horizon, reducing the amount that can be saved into a pension scheme while still realising a tax benefit. Although the change won’t affect everyone, the new rule is an example of what you need to look out for, managing your pension.
Timing is everything, so Brexit isn’t exactly calming news for savers nearing retirement. Uncertainty surrounding the move could lead to further instability in stock markets. To protect yourself in the new year, evaluate underlying risk and match your exposure to your individual needs. If you’re slated for retirement within a few years, for instance, you’ll want to avoid excessive risk by moving assets into less volatile positions. With time on your side, giving you at least five or ten years to build savings, a higher level of risk may be tolerable.
There hasn’t been much positive news about savings interest rates recently. Less than robust returns have made many Britons apathetic about growing savings in traditional accounts. Research indicates as many as three in five don’t even know the rate their accounts pay and only put the terms under scrutiny once a year, at best.
Some observers predict better savings opportunities in the coming year. It is thought the Bank of England will take further action raising the base rate in 2018, which would push savings returns higher. In the meantime, further instability is expected around Brexit, so British families are strongly urged to build a household emergency fund, whenever possible. The cash contingency accounts could help avert crises, should conditions take a turn for the worse in an economy challenged by Brexit.
Exercise Credit Care and Caution
Your personal finances are influenced by moves you make as well as external forces beyond your control. With so many factors shaping your financial life, it is important to deftly manage credit and debt, or run the risk of paying too much for credit opportunities. Before adding new debt in 2018, make use of resources comparing lenders, taking care to evaluate payday loan terms, mortgages, car loans, and personal financing, before making commitments.
If you’ve lost balance within your personal economy, a consolidation loan or unsecured personal loan can be used to repay your most expensive debts (most often high-interest credit card balances). Ditching expensive revolving balances in favor of consistent, affordable repayment terms is a wise way for some debtors to regain control of credit costs and set the stage for a prosperous new year.
Improve Your House
Buying a house is a practical way to spend money, but your home is an investment nonetheless. As such, it’s subject to some of the same thoughts governing other investments. How much is it worth? Is it time to sell? What can I do to add make the most of my investment? Under present market conditions, it may be a good time to hold on to your house and make improvements to boost its value, rather than selling it for a move.
Changes to rules are expected in 2018, which would make it easier for some owners to build additions and make alterations to their homes. Under the new guidelines, owners may be able to add significant value to their homes without needing planning permission. Along with rising mortgage rates and surging property values, the relaxed rules on improvements make it more cost-effective for many Britons to put off moving, in favor of a remodel.
As a fresh year dawns, many Britons seek ways to repair and improve their financial prospects. These are only a few of the proven steps you can take to stabilise cash flow and lay a foundation for prosperity in 2018.