New Year is a time when many people make promises to themselves which often involve being more positive, being healthier, and even being more responsible with their money. During tough economic times, it’s very important to remember that the financial decisions you make today will greatly impact your future. We look at some resolutions you can make for the coming year to help you build a better financial future:
1. Keep track of where your money goes
If you don’t keep track of your spending and saving every month, it’s definitely time to make the resolution start. It’s vital to keep track of your finances by logging all of your income and expenditure, as well as tracking interest earned on savings and the growth, or indeed losses, made by your investments. Christmas is a time when many people overspend, one last present, one forgotten relative or one new outfit for the special day, can lead many people to spend more than they have. Christmas is probably the hardest time of the year to keep track of your spending, but the New Year should be the time you resolve to put it right.
2. Save more by repaying debt
Interest rates are very low, so putting your money into savings accounts will not earn you as much as it used to; you may also find that stock market investments are too risky for you. Repaying debt can therefore often be the answer. The interest rate you pay on unsecured debt, for example personal loans and credit cards, can still be high, even in these times of relatively low interest rates.
Why save and get an interest rate of 3% or 4% when you might be paying nearly 20% on your credit card debt?
3. Diversify your investment portfolio
If you are an investor, resolve to keep track of how well your portfolio is diversified in the New Year. Successful investors know how important it is to diversify your portfolio, between different asset classes, such as equities, fixed interest assets, property and cash, in order avoid putting all of your eggs into one basket. Working with a professional, trustworthy Independent Financial Adviser, who will guide you every step of the way, can be a great way to diversify with ease and confidence. Alternatively there are many websites available to help the DIY investor achieve the same objective.
4. Learn about investing
If you don’t know anything about investing your money, use the coming year to learn all that you can. The first step to successful investing is to educate yourself; the time you put into your financial education will certainly be rewarded in the future, as you make fewer mistakes.
There are a huge range of resources available to choose from. You could take a class in person or online, or you can read up on the subject by browsing through books, magazines and a select few of the countless websites on the subject. Of course each method is different some starting with basic concepts whilst others will look at the advanced techniques used by professionals.
Websites such as MoneySavingExpert or the Motley Fool stock advisor review are a great place to start.
5. Choose an Independent Financial Advisor
If you don’t have the time or inclination to make your own investment decisions, then the answer is probably to find the right adviser.
Of course working with an adviser will mean you have to pay them, nothing comes for free, however, it should mean less mistakes are made and ultimately that you make more money, which at the end of the day is the main aim of investing.
Picking a professional who can teach you and help you grow your money at the same time is the perfect way to get on track quickly and easily. The right adviser will be able to understand your needs and address them in the best way for you, but be careful; the wrong advisor will lead you into making the wrong decisions, so do your research, interview a number of advisers, take recommendations and above all, choose wisely.
If you can’t get a recommendation for an adviser, try Unbiased to search for IFAs in your area.
Phillip Bray writes for Investment Sense and is an expert on all areas of personal finance including savings, investments, and pensions, particularly SIPPs.