Top Ten Tips: Get your finances in shape

JANUARY is so often the hangover after the Christmas party as bank statements land and credit card bills loom. But it’s also the perfect time to seize control of your bank balance. Jeff Salway shares his tips on detoxing your finances and getting on track for the year ahead.

1 Refresh your budget

With household finances being squeezed there’s never been a better time to start budgeting – and keep doing it. Simply note down everything you have coming in and going out and plan accordingly. It’s the simplest but most effective way to keep your finances on track.

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2 Attack your debts

Whether you’ve got long-standing loan repayments and credit cards bills or you’ve just built up some debt over the festive period, the onus is on paying it down as quickly as possible. Fail to do this and the interest charges will accumulate rapidly. If it’s a credit card, try to make more than the minimum payment each month. It’s the first step towards getting everything back under control.

3 Pay down your plastic

Spending on credit cards fell sharply last year, but many people dusted off their plastic to fund their Christmas spending. If you’re not clearing your credit card balance in full every month, make sure you have one of the lowest interest rate cards on the market.

There are several 0 per cent balance transfer deals available, allowing you to switch your outstanding balance to a new card and avoid paying any interest for up to two years. But make sure you know when the 0 per cent period ends as it could then revert to a steep rate.

4 Check your statements

Bank statements aren’t always an easy read but resist the temptation to rip them up straight away. Only by perusing your statement can you identify any irregularities (such as fraud) and get a real idea of your spending patterns.

5 Find a better savings deal

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With inflation rising and interest rates still low it’s essential to get the best possible savings rate. Conventional savings account returns are falling short of inflation but you can get a better return if you’re happy to keep some of your money out of reach for three or five years, in a fixed-rate individual savings account (Isa) or savings bond. Some regular saver products pay good rates, while social lending websites such as Zopa offer returns of 7 per cent or more on cash.

6 Review your insurance

Do you have the right insurance policies in place? If people depend on you, one of the most important things to insure is yourself. Life insurance is one of the cheapest forms of cover you can buy. So if you don’t have life cover but do have other insurances, then it’s a case of thinking about what’s more important to your family. Take time to research the best deals available.

7 Time for a mortgage manoeuvre?

Standard variable rate mortgage costs, at record lows over the past three years, are edging up. But there are a lot of competitive fixed-rate deals out there, particularly if you have some equity in your home. If your current loan isn’t competitive it may be worth switching even if there’s a penalty clause. Check the fees, however, as they vary hugely.

8 Change energy tariff

Energy bills rose sharply last year but you may be able to move to a cheaper tariff. estimates that households regularly switching supplier over the past five years saved over £1,000. There’s a difference of some £300 a year between the best and worst tariffs. Online plans paid by direct debit tend to be cheaper, so try comparison sites such as, and to find the best deal.

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If you’re struggling to pay your bills it’s also worth contacting your existing supplier, as all energy firms have schemes aimed at helping those in fuel poverty.

9 Pay attention to your pension

Pensions are among the most tax-effective ways of saving. And of course, if you want a secure retirement you really have to take matters into your own hands. To find out how much you need to save each month for a decent pension – and the cost of not saving – visit

If you’re not in your employer’s scheme you’re missing out on tax breaks and employer contributions. If you don’t what kind of pension to use, read the beginner’s guide to pensions at or take advice from an independent financial adviser (IFA). To find an IFA near you, visit

10 Don’t give the taxman gifts

If you are able to save, your first port of call is an Isa. The tax allowance for 2011-12 is £10,680 (£5,340 in cash), rising to £11,280 (£5,640) in April. Some NS&I and friendly society savings products are also tax-efficient.

Also ensure you are claiming any benefits to which you may be entitled – visit to check if you’re missing out on anything.