New year, new you – or so the saying goes. And once I’ve given myself the 1 January 2018 off to recover from New Year’s Eve (everyone knows New Year’s Day doesn’t count – it’s technically still Christmas), I’ll get my life back in order after the festive break.
That means back to work with a revitalised attitude, back to the gym to sweat off the over-consumption of mince pies, chocolate, and turkey, and back to get more bang for my buck.
Last year, my financial goal was to buy a house, and every penny I saved was put towards it. Now that I’ve achieved it – without giving up the avocados – I can start thinking about new financial resolutions for the year ahead.
I’m basing this on three money mantras: “There’s no better time than the new year to take a fresh look at your savings and pension”, “Financial resolutions don’t have to be diffi cult or complicated”, and “Little steps can make a big difference”.
So, I’ll cut to the chase and dive in…
1. Choose better funds for my workplace pension
I am auto-enrolled into my company pension and pay in above the minimum 1%. Happily, my company also contributes more than its 1% legal requirement too. (From April 2018 employees will be required to contribute at least 3% and employers will have to pay in at least 2%.)
However, a key factor that impacts how much my money will grow is the funds that my pension contributions are invested in. Currently, my money is invested into the “default lifestyle fund”, which shifts from equity-based funds to a safer mixture of bonds and cash the older I get. The problem is, that this is based on a retirement age I plucked from the air in my mid-twenties, when the reality is I have no idea when that will happen.
There are other investment fund options available within the plan, so I plan to select some funds that are more aligned to my ability to take risk given that my money’s got some 30-odd years to grow.
2. Invest in a Stocks and Shares Isa
While I was saving for my house, I stuck £200 into a Help to Buy Isa each month – the maximum amount possible. This was so I could later earn as much of a bonus as possible – see page 76 for more on whether you should plump for a Help to Buy Isa or a Lifetime Isa (which wasn’t available when I started saving for a deposit).
In the five months since moving, my £200 a month has been spent on decorating and furniture.
Now that I’m in a position to start saving again – and I do have a rainy-day fund in cash to rely on should I lose my job, for example – I’m thinking of increasing my pension contributions by £100 a month and drip-feeding the other £100 into an investment Isa each month.
I’ve only saved in cash in the past, so I’ll need to calculate which Isa provider is best for my needs, based on the small sum I’ll be investing and the charges levied, as well as the funds they offer.
3. Sell unwanted items
I’d like to think I’m pretty savvy (don’t read stingy into that!) when it comes to saving money. I always compare utility bills and switch and save where I can, I’ve got a bank account that’s working for my money, I don’t buy anything unless it’s got a yellow discount sticker or some kind of offer on it, and cashback is a no-brainer when shopping online.
But I get attached to items I’ve never used or only used once, when I should sell them. To combat this, I’ve joined – and become slightly obsessed – with a local Facebook group where you buy and sell things you no longer want or need. This, I feel, is a good opportunity for a clear-out and a chance to boost my new year coffers.