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What better way to get your finances in order for 2008 than making managing your finances a priority when it comes to setting your New Year’s resolutions. Halifax has prepared some timely suggestions in the form of three golden rules for people who are looking to turn over a new leaf in 2008.
Peter Jackson, head of products at Halifax, said: "Most of us religiously hit the High Street for the January sales, but too few of us include banking products in our bargain hunting. By making a few small changes today, you could make some significant financial gains in the future."
Rule number one: Always Shop Around
The majority of people will have at least one of the following: current account, mortgage, credit card. Now is the time to make sure you have the best deal available for you. Put interest rates at the top of your shopping list.
Make your current account work harder – Just because your money is in your current account doesn't mean it can't be earning you interest.
Cut the costs of your festive spending – Halifax Credit Card's research showed that the average Christmas shopper spends £383 on presents. If this is done on an expensive store card or a card with a high APR you could end up paying much more than you bargained for.
Rule number two: Save, save, save
Set up a standing order – One easy way of getting into the saving habit is to set up a standing order so that funds can go straight from your current account to your savings account as soon as you get paid each month.
Get the kids involved – It's also a good idea to encourage children to save for the future, through a regular saving account.
Use your full ISA allowance in 2008 – Setting up an ISA helps to make the most of your savings and means you avoid paying tax on any interest earned. You can currently save a maximum of £7,000 each tax year, either by investing up to £7,000 in a maxi stock and shares ISA or a combination of up to £4,000 in a mini stocks and shares ISA and £3,000 in a mini cash ISA. From 6 April 2008, the distinction between maxi and mini ISA’s will be removed and everyone will have an annual allowance of £7,200 – of which up to £3,600 can be saved in a cash ISA.
Rule number three: Move closer to mortgage free day
Overpay on your mortgage – Making small overpayments on your mortgage each month will reap huge rewards over the longer-term. For example, on a £100,000 mortgage taken out on a typical variable rate of 7.5%, overpaying £50 per month will reduce the term of your mortgage by four years and save you over £22,000. Overpaying by £100 per month on the same mortgage will reduce your term by almost seven years and reduce the amount repaid by over £35,000.
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