True lifelong financial planning for the serious business of life.
True lifelong financial planning
for the serious business of life.
True lifelong financial planning for the serious business of life.
True lifelong financial planning
for the serious business of life.
Category: Lifestyle
2024 is right around the corner, and this can be the perfect time to think about some goals, ambitions, and resolutions for the year ahead.
While healthy habits and new skills tend to be the more common choices for new year changes, financial resolutions should also be at the top of your list.
Assessing your financial habits and making changes where necessary could give you more control over your financial security for the coming year and help you feel more confident about your wealth.
So, continue reading to discover five helpful financial new year resolutions that could set you off on the right foot for 2024.
Having a will in place is essential, as it can ensure that your wealth goes to the correct people should you pass away. Moreover, a will could help your loved ones avoid being embroiled in a tense legal dispute over the division of your assets at a time when they’re already struggling with your passing.
So, the new year could be a practical time to establish a will that lays out your desires and wishes for your estate after you pass away.
If you already have a will, you may still want to ensure it’s up to date. This is especially important if your circumstances have changed, as your current will may no longer reflect your wishes.
For example, significant life events, such as the birth of a child, marriage, or divorce, can shift your priorities, and you may decide that you need to make changes to your will.
Having a pot of savings to fall back on should an unexpected expense arise could provide much-needed peace of mind and security, as you can rest assured that you and your family will be looked after no matter what happens.
Indeed, say you’re reliant on your car for work and it breaks down, or you’re injured and can no longer work; your emergency fund could help you deal with any of these unforeseen costs without hampering your progress towards your long-term financial goals.
The start of the new year could be the perfect time to create an emergency fund to provide this financial security. Or, if you already have one, it may be worth topping it up to prepare yourself for the worst.
It may be prudent to keep at least three to six months’ worth of household expenses in an easy access savings account. By doing so, you’re ensuring that you’ll be able to access the money at a moment’s notice to deal with any unexpected costs.
It’s worth noting that if you’re self-employed, or have many dependants, it may be worth keeping more in your emergency fund, perhaps as much as 12 months’ worth of household expenditure.
ISAs are invaluable tools to help you save and invest for your future in a tax-efficient way. This is because any interest or growth you receive on your wealth in an ISA is free from Income Tax and Capital Gains Tax.
It’s important to remember that there is a limit on the amount of money you can place in an ISA each tax year, which stands at £20,000 as of 2023/24.
By making the most of this allowance, you can grow your wealth more effectively over time. However, the ISA allowance doesn’t roll over, so if you don’t use it entirely before the end of the tax year in April, it’s gone for good.
As such, the start of the new year could be the ideal time to assess how much you’ve deposited into your ISAs over the past year. If you haven’t used your full £20,000 allowance, you can always make more deposits before it resets at the start of the new tax year to ensure you’re saving and investing your wealth as tax-efficiently as possible.
If you’ve yet to retire, it may be wise to take some time at the start of the new year to review how much you’re contributing to your pension. If you have some money to spare each month, it may be worth increasing your contributions.
By doing so, you are boosting the overall value of your pension fund, ensuring that you can support your dream lifestyle during the next phase of your life.
Moreover, you may even be able to benefit from tax relief if you increase your pension contributions. Indeed, as of the 2023/24 tax year, the Annual Allowance – the limit on how much you can contribute to your pension while receiving tax relief – stands at £60,000, or 100% of your earnings, whichever is lower.
This means that, as a basic-rate taxpayer, a £100 contribution would only “cost” you £80, while the additional £20 would be supplied by the government.
Better yet, as you’re likely a higher- or additional-rate taxpayer, you could benefit from an extra 20% or 25%, respectively, by claiming it through your self-assessment tax return. As such, if you’re an additional-rate taxpayer, a £100 contribution would only “cost” you £55.
In fact, the start of 2024 could be the ideal time to claim any additional tax relief you’re entitled to, as the deadline for completing your self-assessment tax return is 31 January 2024.
One aspect to consider as a high earner is that you may be subject to the Tapered Annual Allowance. This reduces how much you can tax-efficiently save in your pension each tax year, so it may be wise to seek financial advice. Otherwise, you may incur an unexpected tax bill.
While you likely want to think positively about the year ahead and not consider the bad things that may happen, it’s prudent to protect yourself and your loved ones against such eventualities. That’s why it may be sensible to consider whether you have any gaps in your financial protection at the start of the year.
For instance, if you fell ill and could no longer work, would you be able to support yourself and your family during this period of lost income? Similarly, if you pass away, would your loved ones be able to retain their standard of living without your help?
While often challenging to think about, these scenarios are why it’s essential to ensure that you have financial protection in place. Or, if you already have protection, it may be wise to check whether it still provides you with adequate levels of cover.
There are several different forms of financial protection available, and some that might be useful to you could include:
Knowing that you have protection in place and that it will provide you and your loved ones with enough financial support should the worst happen can give you invaluable peace of mind that you’ll be protected, even in the worst of circumstances.
If you want to set yourself on the right foot financially for 2024 and ensure you’re prepared for anything the year throws at you, then we can help.
Email [email protected] or call us on 01625 466360 to find out more.
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.
Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
If you’d like more information about this article, or any other aspect of our true lifelong financial planning, we’d be happy to hear from you. Please call +44 (0)1625 466 360 or email [email protected].
Click here to sign-up to The Clarion for regular updates.
Our opening hours are as follows:
From the whole team at Clarion, merry Christmas and a happy new year.