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Top ten tips to help you save money this new tax year

As the new tax year gets underway, this is an ideal time to take stock of your finances to see how and where you can save cash, so you can see if you are able to put away some precious savings for a brighter tomorrow.

Here’s our top ten tips on ways to spring clean your finances and free up some money to enable you to start on that savings habit you know you need, but often find hard to achieve!

1. Set yourself a realistic budget and stick to it

Here’s where you need to be really honest with yourself. Start by checking your typical monthly base salary and then draw up a list of your normal outgoings for an average month for a comparison.

Place your main regular monthly expenditure in order of importance; start with your mortgage, then your council tax and utility bills, credit cards and the like. Last on your list should be discretionary spending such as clothes, entertainment and nights out.

Total up your typical monthly spending and measure this against your monthly income to see just how much you might already have available to set aside in a regular monthly savings account.

2. Identify the areas where you can make savings each month

It’s best to start off on the small items you might be able to save on rather than looking for one major item of expenditure. Perhaps you can cut down on expensive trips to the coffee shop, make time to prepare lunches at home rather than having to buy a meal for work every day or watch your favourite videos at home rather than making a trip to the cinema?

Many people get daunted by looking to save on a large single monthly item, when it is surprising how much you can save by simply cutting back on treats that soon mount up.

3. Pay close attention to bills such as energy and insurance

We’re bombarded with advice on how to compare suppliers such as the energy and phone companies and switch to better deals wherever possible, but how many of us do it. There is a host of comparison sites that you can visit to compare costs for gas, electricity, phones, insurance and more; often it will only take you 15-20 minutes to go through the comparison process, but you could end up savings hundreds of pounds every year. Money that you could invest in plans such as ISAs where your savings can grow faster thanks to the tax advantages they offer.

Another area where a little effort can mean major savings is insurance renewals. Don’t simply renew automatically when you get the policy renewal letter. 20 minutes on a comparison site will soon tell you whether you can get the same cover for less or perhaps even review areas such as policy excesses to see if you can reduce the cost by changing the excess sum.

4. Target your debts to get back in control of your finances

There’s little to be gained by putting money into savings if you’re losing even more by having to meet excessive interest rates on debts such as loans and credit cards. Your first objective should be to pay off any debts as soon as possible or look for better deals such as balance transfer credit cards or those offering an extended interest-free period. There are plenty on the market if you take time to look round.

5. Review your bank current account

Are you paying a monthly fee or overdraft charges on your current account with your bank? Again a little research will help you to identify those banks that offer pretty healthy levels of interest on money held in your account or other benefits that can save you money elsewhere. Legislation designed to make switching your bank quicker and simpler has meant that you can now move your account and be up and running and saving money in just 7 days.

The information you need is out there for you and a short period of time spent doing your research can result in some extra disposable income you can invest for tax-efficient savings.

6. Savings tip for married couples

The Marriage Allowance allows you to transfer £1060 of your personal allowance to your husband, wife or civil partner. Apply for this allowance now and by making this transfer as a couple you stand to pay up to £212 less tax in this tax year. Money you could look to invest.

7. Make sure you set a target to save every month

One good way to catch the savings habit is to set up a standing order to make a payment every month in to your chosen savings plan or account. Ideally you could set up the payment date for a day or so after you have been paid so it doesn’t feel like too much of a strain. And it can be a good idea to tell your family and friends that you are making this commitment so they can support you – and you’ll feel more inclined to keep to this promise!

8. Make sure you are using your tax-free allowance

Once you’ve identified ways in which you can cut costs to help provide you with some disposable income to save on a regular basis, the first thing you should do is look at tax-efficient options that can make the most of your precious cash. That often means opening an ISA and the government has maintained the maximum investment level for the 2017-17 tax year at £15,240. You can save up to this amount in either cash ISAs or stocks and shares ISAs or a combination of both, with no tax to pay on the interest earned or on your final lump sum. This means that investing your cash in an ISA makes your money work harder and grow faster.

9. Another change that makes the ISA a tax-efficient savings choice.

A change in the ISA rules for 2016-17 means that instead of being able to simply put up to £15,240 into an ISA in total, you can also take out money if required during the year and put it back in within the same year, without losing any of your ISA tax benefits, just as long as the repayment is made in the same tax year as the withdrawal. This provides the tax-efficient ISA with an additional benefit.

10. Set yourself a target to enjoy the rewards you would like most

Savings for savings-sake is fine, but you are more likely to stick to your commitment if you have an end goal in sight. Whether you are saving for your children’s education, for that first home, for a new car, home improvements or that holiday of a lifetime , set yourself a target that will mean your savings achievements will really make a difference in the future and make your efforts that much more worthwhile!

If you would like any further information about this subject or you have any other financial questions, please get in contact with one of our financial advisers. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.

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