At the start of 2015 I highlighted some of the important financial resolutions that should make a difference to your financial planning such as building up an emergency fund, and paying off expensive debt.
This year, however, should be the year where you take time to try and understand your finances. The government certainly does not make things easy with the ever increasing complexity of legislation, but anyone who takes time to try to understand will be rewarded.
There are many simple ways to take advantage of the rules for those who understand them.
Every week we find couples who do not realise that they can transfer part of their personal income tax allowance to their spouse if they are not using it all themselves.
Every week we come across people who are not using all of their capital gains tax allowance because their investments are in insurance company bonds resulting in extra tax being paid; and every week we talk with people who aren’t making full use of the pension allowances.
We have even found in several cases that income tax relief was never fully claimed on pension contributions all because no one told them they had to claim it.
So take time to learn about your finances and where necessary seek out information and advice. Pension wise and the money advice service can be good places to start, without incurring any cost.
As well as resolving to spend time understanding your finances you should also review the levels of risk on your investments and pensions at the start of every year to ensure it is still appropriate.
Most people that we see are taking far too much risk on their pension funds without realising it. You should avoid having too much money in cash deposit accounts as interest rates are likely to be terrible for all of 2016.
Cash deposits should only be held for emergency funds and for short term needs because over the long term cash accounts are unlikely to beat inflation.
David Hill is a Chartered Financial Planner and Trust & Estate practitioner at Hills Financial Planning, 15 Agnew Street, Larne. He can be contacted on 028 28276814 or by email: email@example.com