Looking After Your Money

Looking After Your Money – Making The Most Of What You Have

House prices are going down and everything else is going up. Very few of us feel as financially secure as we did a year ago. So in the current climate, wasting money is not an option. Whether we are well off or not so well off, we all want to know how to make the most of what money we have.

Obviously, a good start is to budget carefully. Cut out unnecessary expenditure – most of us are shocked if we sit down and consider how much money we waste every week. A lot of cheaper “own brand” products at the supermarket are just as good as the more expensive brands. Pay bills in the most efficient way – e.g. by using Direct Debits when it’s cheaper to do so and not when it isn’t.

Having pruned your expenditure, you hope there may be something left over by the end of the month. If there is, make sure you make the best possible use of it.

ISAs

The simplest and most efficient way to save is via a Cash ISA (Individual Savings Account). Ask an independant financial adviser which are the best accounts currently on the market. Remember there is nothing to stop you switching accounts at a later date if you find a better one – and you should. An ISA will pay you interest and you also have access to your money.

Savings accounts

If you want to save more than the maximum amount for an ISA (currently £7,200 in a tax year), you should find a savings account that pays good interest. Again, an adviser or a comparison site can point you to the best savings accounts currently on the market. Usually, the longer you can keep your money in, the better interest rate you can get.

Tax bands

The most efficient way of handling your money involves not just finding the best interest rates, but making the most of your tax bands, especially if you are a couple. The more of your savings you can keep in the name of the lower tax payer, the more of them you can keep.

Children’s savings

The earlier you can start saving on behalf of your children, the better. You – and they – will be glad of it when it comes to secondary school or university. Look for children’s accounts that pay a high interest rate, rather than those that offer a lower interest rate plus free gifts. The government allows children’s accounts to earn interest up to £100 a year without being taxed. This means you and the other parent can each invest up to £2,000 in each of your children’s accounts without it being taxed (though you can’t go on doing this year after year, as the accumulated interest would then go over £100).

Life cover

If you have dependants, life cover is not a luxury. However, selecting the right policy can be tricky. You have to decide what exactly you want the policy to cover – i.e. mortgage payments, education expenses, replacing breadwinner’s salary etc. You also have to decide what type of policy you need – e.g. level term, decreasing term, increasing term etc. Then you have to find the most advantageous quote. It can all be very confusing and you should ask a financial adviser for help.

There are a number of ways of looking after your money and making the most of what you have – whether it’s a lot or a little. If you need assistance in assessing your overall financial situation and deciding how best you can maximise your assets, look for an Independent Financial Adviser – he or she is there to help!

EB May 2008