There is no better time than now to review your finances. Despite the doom and gloom of lockdown due to Covid-19, on the positive side millions have found themselves saving more money than ever before.
Statistics show the percentage of disposable income that households have saved has risen to an all-time high, with four in five families saying they have more money to spend since lockdown.
Increased remote working has resulted in less spending on travel. The closure of restaurants, bars, entertainment and leisure has opened the window to boost savings without temptation.
So how can we put our lockdown savings to good use?
Here are some of our suggestions.
Review your Debts and Mortgage
Work out how much you owe, who you owe, what the interest rate is on what you owe and how long you have, to pay it back
- Can you change your lender and get a cheaper deal?
- Check your APR! – can you get a lower rate?
- Are you in a fixed rate or the lenders Standard Variable Rate? SVR = BAD!
- Are you able to make any overpayments?
- What term is left? – Does it finish before expected retirement for example?
Remember, you are borrowing the same money – why not borrow it cheaper elsewhere?
Review your Pensions and Investments
You should review your plans at least annually to ensure they remain on track and don’t start to under-perform without you realising!
- Check your state pension – age it will be received and how much it will be worth!
- Check fees & costs – can you pay less in fees elsewhere?
- Performance – compare against the correct benchmark and consider alternatives!
- Risks – what risks are associated with your plans? Is it too much or too little?
- Tax – ensure you are maximising use of your tax allowances, pensions and ISA’s for example?
- Premiums – are you saving enough to meet your overall goals?
- Planning – do you know how much your plans will be worth in the future and do they align to WHEN you want to retire!
- Increase your pension contributions – to achieve those long-term goals.
- Invest in the stock market – but take regulated financial advice and assess the risk before doing so.
Remember….charges, fund managers, performance and risk will change regularly – don’t leave it too late!
Review Protection Policies
Insurance policies whether home, car or life, your policies should be reviewed at least annually and NEVER renew with the same insurer until properly checked out!
- Different insurers will charge different rates – make sure yours is the cheapest!
- Cover – however do not compromise on cover, defacto rating can be very useful.
- Amounts – ensure cover levels are appropriate for your circumstances. In other words, a policy that was taken out when you were single, may not be enough anymore to provide for your growing family or larger mortgage!
- Life cover – can these be re-structured, maybe by putting premiums through a limited company instead?
- Consider taking out additional policies – business, income, critical illness? Be prepared now more than ever during these uncertain times!
Remember, never cancel a policy that is in force until you have sourced a new one. It may be better to take an additional policy (to provide addition cover needed) rather than a complete change!
There you have it, a brief intro to get you started in planning how to make your lockdown savings work for you. Don’t just make this your financial New Years resolution. Make these resolutions for life!!
As always if you need any help putting your plans together or reviewing your existing plans, get in touch, we would be happy to assist!