This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice please consult us here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.
The rising cost of living is giving many households much pause for thought in 2022. More than 50% of UK homes have reduced their gas and electricity consumption as energy costs spiral, and 1.66m video streaming subscriptions have been cancelled (mostly by young people) in the second quarter of 2022 alone as people look to save money.
Sorting out your finances is always useful to optimise your financial position; yet this is even more pressing today. Below, our team at Elmfield Financial Planning in Padiham, Burnley offers a short guide on how to do this. We hope this is useful and please get in touch if you’d like to discuss your own financial plan with us over a free, no-commitment consultation.
Take control of your banking
Around 20% of Britons do not track their monthly expenses at all, and far more are inconsistent with this. Keeping a close eye on what you spend, when and on where is vital when minimising needless costs. Finding a good banking (or personal finance) app can be a great tool to improve good money habits. Make sure you find one that is free, secure and easy to integrate into your daily life. Many will even work with your bank cards to record purchases and cash withdrawals.
Get your house in order
For most people, the mortgage (or rent) will form the biggest monthly expense. Getting the best deal here, therefore, can help lift a lot of strain from your budget. Unfortunately, in 2022 interest rates have been rising which has led variable-rate mortgages to go up. However, you may be able to save money by switching to a fixed-rate deal. Don’t just approach your own lender but consider the wider market as well. Renters may benefit from moving to a less costly area or by getting a new shared living arrangement with other tenants.
Claim all available tax breaks
Around 2.4m qualifying couples miss out on the marriage tax allowance each tax year, worth up to £252. Here, one person in the couple can transfer up to £1,250 of his/her £12,570 income tax free personal allowance to the other person (if he/she is a non-taxpayer). The other person must be a basic 20% rate taxpayer and both of you must have been born on or after 6 April 1935. You must be married together or in a civil partnership. If you qualify, therefore, make sure you claim it via the UK government’s portal.
Other reliefs are available and together these could add up to significant savings. Donations to charity, for instance, may be eligible for Gift Aid. In effect, this allows you to give an extra 25p for every £1 you donate. You can also claim back overpaid tax from the government (e.g. due to being placed on the wrong tax code) using HMRC’s free online service.
Get the best financial arrangement for your kids
Households with young children face particular pressure due to the costs of childcare. In 2022, a full-time nursery place (50 hours) for an under-2-year-old costs, on average, about £14,000 per year (£1,166 per month). Here, couples may need to get creative to maintain financial stability. For instance, it is not always optimal to have one person working full time whilst the other devotes their energies to looking after the children. Your income may stretch further if you both work part-time and share the latter between you.
Suppose you decide both work three days a week and both of you would earn roughly the same amount (e.g. £30,000 per year). This may allow you to only pay for one or two days of childcare per week, depending on the days you both work. It also means that both of you can earn up to £12,570 in salary without income tax via the Personal Allowance. Taken together, this may leave your household better-off compared to having one person earning a high salary whilst the other person stays at home. Here, a financial adviser can help guide you on the best options.
Don’t neglect planning for the future
Whilst the here-and-now is hugely important, be careful not to forget about your retirement plan, protection plan and estate plan. These help to keep you moving towards your goals if/when the career is over, if disaster strikes (e.g. a crippling accident which stops you working) and when the time comes to pass wealth down to the next generation – something that can happen anytime. We are here, at Elmfield Financial Planning, if you’d like to talk to a specialist about this.
Invitation
If you are interested in starting a conversation about your own financial plan or investments, then we’d love to hear from you. Please contact us to arrange a free, no-commitment consultation with a member of our team here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.
Reach us via:
T: 01282 772938
