How to get your finances fighting fit for 2024

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• Standard Life shares tips to help set you up for financial success in the new year despite persistent cost-of-living pressures

Dean Butler, Managing Director for Retail Direct at Standard Life, part of Phoenix Group comments: “After a tough couple of years, the new year is the perfect time to review your finances and household budget and take steps to improve your money situation or become more confident about tackling money issues. While you may feel overwhelmed by your financial situation, even taking small steps to review your options and making a plan will help ease financial anxiety.

“As we head into the new year, 54% of people say they are stressed about their finances with only two fifths (41%) of the population feeling positive about their financial situation and 58% are worried about running out of money in the future. Our Retirement Voice research also uncovered that more than half (54%) of us are feeling stressed about our finances.

“However, you can start to refresh your finances by taking a three-pronged approach - firstly, review any debt and take steps to keep it in control, secondly, set a budget for day-to-day spending and thirdly, if you possibly can, consider short and longer-term saving options.”

Dean Butler shares tips to help get your finances fighting fit for 2024 – and beyond:

1. Get support with debt – “If you’re concerned about debt, there are resources available to help you. MoneyHelper has lots of guidance on how to deal with money you owe. For example, there’s information to help you figure out which debts to tackle first, and the website can point you in the direction of professionals you could talk to for free.


2. Create or review your budget – “It may seem obvious, but making a household budget can give you peace of mind that you’re able to afford your essential costs, and during tougher economic periods, this is really important. If you already have a budget, it’s worth checking to see if it’s still working for you, especially as many costs have been rising over the last few months. When you take a closer look at your current and past spending habits, you might find ways to cut costs going forward – freeing up some money to put elsewhere. There are a number of budgeting apps that can help with this by analysing your spending and allowing you to categorise what you spend, making it easier to see where you can make savings.


3. Set goals – and consider ways of saving and/or investing – “If your budget allows try to set some manageable savings goals for yourself. The clearer your goals, the easier it is to put a plan in place to achieve them. Even if you find that you don’t have the money to set aside right now, just taking the time to explore your options will help you better manage your finances. If you can save, first try to build up a ‘rainy day fund’ for those unexpected expenses that can tip monthly budgets over the edge, like appliance breakdowns or car repairs. If that’s covered, you can look at something a bit longer term. It’s a good time to save right now with even a couple of easy access cash saving accounts offering rates higher than inflation, however the best deals will be on fixed 1-2 year savings accounts. While rates are higher, cash ISAs are an attractive option as you won’t pay any tax on the interest you earn.
   
   “For those in a position to do so, investing money rather than keeping it in cash traditionally offers the potential for higher growth in the long run. Even If you’re earning 5.5% interest and inflation falls further to 4%, returns won’t be huge with £10,000 being worth £10,258 after two years. When considering investing, make sure to check the charges you’ll be paying are competitive – comparison websites can help.”

Growth on £10,000 earning 5.5% in a cash-based savings account

4. Consider longer-term savings and retirement planning – “Remember that saving into a pension plan can be a good way to reach your goals. They offer tax relief on your payments, so putting money into one can cost less than you might otherwise think. If you have a workplace pension plan, your employer will normally pay into this – usually making a minimum payment of 3% of your earnings, while your personal minimum contribution is typically 5%, with some employers willing to pay in more. Some even match the employee payments up to a certain amount – meaning if you can put in more, they will too. It might be worth checking to see what’s possible, as this is a great way to give your pension savings a boost. If you’re looking at opening a new personal pension plan, or if you’ve just changed employer and you’re wondering whether to bring your pensions together, as with other types of investments make sure to check the charges you’ll be paying are competitive.”


5. Track down your pension pots – and consider bringing your pension pots together - “As you head into the new year, try to make sure ‘future you’ won’t be missing out on money that you’ve previously saved. If you’ve ever changed jobs, there’s a good chance you’ve got more than one pension pot, and it might be hard to keep tabs on them all. Some people forget all about their old pots. You may be able to track personal and workplace pension savings down using the government’s Pension Tracing Service. You might find that your old pots have increased in value over time, giving you more money to put towards your future.
   
   “If you have multiple pension pots, you could think about bringing them together into one plan. This can have several benefits:
   • You have all your pension pots in one place, so it’s easier to see if you’re on track for the retirement you want
   • You can cut down on admin, as you’ll only have one provider to contact when your circumstances change
   • You might find you have lower charges
   
   “However, transferring other pension plans will not be right for everyone, and you could lose valuable benefits and guarantees. There is no guarantee that you will get more as a result of transferring. You need to consider all the facts before deciding if it's right for you.”


6. Use online tools and calculators to check and plan – “With online tools and calculators, you can check if you’re on track for the future you want, as well as decide how best to manage your money as you start the new year. There are tools in which you can input the type of lifestyle you’d like when you stop working, which then show you how much money you might need to fund it. Similarly, pension calculators can show how much you might have in your pension pot further down the line. However, don’t panic if you’re not quite where you want to be, as these tools can simply give an idea of what your savings might look like – which may help you choose how much to save into your pension plan each month. Our Retirement Voice research highlighted the power of planning - 62% of those surveyed who had done a great deal of planning felt positive about their financial situation, compared to 22% who had done no planning.”

ENDS

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