Happy New Year! Let’s welcome 2024 with purpose and financial wisdom! It’s time to pave the way for a prosperous new year.
Here are my top eight personal finance resolutions for 2024, designed to ensure you’re in a stronger financial position by the end of the year.
1 – Find out the cost of running your life!
Many people have simply no idea how much money they spend each month – or where this money goes.
You may think you do; you might even know the total cost of all your regular outgoings, but let me ask you – That ‘on paper’ amount that you should have left each month… Have you ever had this!?
Working out and sticking to a monthly budget is all about spending less than you earn. If you achieve this, month on month, you will be in a better financial position at the end of 2024 than you were at the start.
By deciding in advance where you will spend your money, you should make it easier to avoid the temptation to spend on frivolous/unnecessary items.
Rearranging monthly standing orders and direct debits to be taken from your bank account on the same day that you are paid also helps with this, so you know how much you have left each month.
Oh, and watch for those subscription services – are you still using them?
Review this regularly to compare where you planned to spend your money with where you actually spent it.
Start with the ‘Survival’ money, then move to the ‘Safety’ money before moving on to the ‘Freedom, Gift & Dream’ money!
2 – Avoid being ‘in the red’
Short-term debt (credit cards, store cards, overdrafts, etc.) is expensive.
Debt is a drag on your ability to meet other financial goals and an emotional drag on your attitude towards money and personal finances.
Make clearing short-term debt a priority before starting to save towards other plans.
In your budget, prioritise debt over savings. Don’t take on more short-term debt.
I like the idea of setting and marking a “free-from-debt” day on your 2024 calendar. If you do, make sure you achieve it.
3 – Review your mortgage
Your mortgage is likely to be your biggest financial commitment.
The last of the low-rate fixed deals are coming to an end now interest rates have risen. Getting a good mortgage deal is quite challenging with rates now expected to be higher for longer.
It remains important to review your mortgage regularly to ensure you are paying a competitive rate of interest.
Also, consider whether your mortgage allows you to “overpay” each month or on an ad hoc basis to save interest and become debt-free sooner.
4 – Pay less tax
Simple steps you can take to pay less tax include making tax-relieved contributions into pensions either personally or via an employer-arranged scheme.
By sacrificing salary by paying directly into such a scheme, not only do you receive income tax relief at source, but you may also get National Insurance (NI) Contribution savings for both you and your employer.
All of this with the added bonus of having improved your income potential in retirement.
5 – Plan for the future
Starting a pension should be a big priority for many people in 2024. We constantly hear that we will need to save more and work for longer. This has a lot to do with us living longer.
You cannot solely rely on the State for a sustainable level of income in retirement so this means you need to use a pension or other investment vehicle to create your own sources of income for later life; if you ever want to stop work that is.
6 – Make a Will
If you don’t have a Will, make one!
If you die without a Will, i.e. ‘Intestate’, your estate may not be distributed according to your wishes; in many cases where remarriages have occurred, the family structure can be more complex (it is worth pointing out here that marriage voids existing wills unless made in contemplation of the marriage). Don’t risk dying ‘Intestate’.
Anyone making a Will, especially with any connection to the UK, should ask their advocate to consider the tax consequences of making such a Will (or transferring ownership of assets when you are alive, for that matter), not only to you personally but to your beneficiaries.
Ensure you obtain financial and/or tax advice in this area to avoid giving your loved ones an unwelcome tax bill.
At the same time, give some thought to family financial protection, particularly what would happen to your family from a financial perspective if you were to die, lose your income or contract a critical illness such as cancer- we all know someone whose life has been affected by cancer.
It is possible to insure against most risks, but you need to quantify them first.
If you have existing life assurance plans, review them to ensure they remain cost-efficient, relevant, and appropriately structured. For example, you might discover that the cover you have in place is now redundant or that you are paying over the odds for the level of cover you have.
7 – Always shop around
Your golden money-saving rule should be to always shop around. The Internet makes it quick and easy to compare prices on just about any product or service.
However, the cost-effectiveness of shopping online should be balanced against the benefits of shopping ‘local’; you’re keeping someone in a job who supports the same economy in which we all participate.
Every £1 spent on Manx Food is worth £1.83 to the Manx economy, versus 58p with a non-local business (source: IOM Government).
Additionally, the local food growers don’t rely on Irish sea conditions to deliver it, and provide excellent sources of organic and grass-fed produce.
8 – Get professional help
During 2024, carry out a comprehensive review of your personal finances with an impartial Financial Planning professional who has access to the tools and knowledge needed to improve your current and future position.
Our newly created graphic, ‘The Key Benefits of Financial Advice’, distils the benefits of working with a financial adviser, ensuring even those new to financial planning can grasp the key advantages at a glance.
