The most important financial housekeeping jobs to prepare you for the new year

As the new year approaches, you might be thinking about some of the changes you want to make in 2024.

You wouldn’t be alone as, according to Finder, 58% of people made a new year resolution for 2023. While people often plan to make health changes such as exercising more or eating better, for instance, 27% of people planned to make a money resolution.

This could be a sensible idea because the new year is an excellent opportunity to review your financial plan and ensure you are in a strong position for the year ahead.

Read on to learn about five simple financial housekeeping jobs to help you prepare for the new year.

1. Review your goals

Your life goals are a crucial part of financial planning because your priorities now and in retirement may guide your decisions about pensions, savings, and investments. Typically, the purpose of your financial plan is to ensure that you have enough wealth to achieve your wider targets.

That’s why discussions about financial planning often start with a conversation about your aims in life. However, as our circumstances change, those goals may shift too.

For instance, the arrival of a new grandchild could mean that you want to spend less time travelling and more time with your family. You might also want to use more of your wealth to support loved ones.

As such, it may be beneficial to review your goals each year and consider whether your current financial plan is still suited to those ambitions.

Consider short-, medium-, and long-term goals and what your priorities in life are. It could also be useful to list some milestones you want to achieve this year. Paying off debts or reaching a specific savings target are both common examples of this.

2. Revisit your household budget

Having a detailed budget is an effective way to manage your spending and make sure that you can contribute the necessary amount to savings and investments for the future.

However, if your priorities have changed, your current budget may no longer be suitable. Additionally, the cost of living crisis has put extra financial pressure on everybody, and it may be more difficult to contribute to savings or investments as a result.

Fortunately, reviewing your budget could help you find areas to cut back on or redirect funds to, so you can ensure that you are still able to work towards your long-term goals.

3. Organise your paperwork

Organising your affairs ahead of time could help your family avoid a stressful situation if you suddenly fall ill or pass away.

You likely have lots of paperwork relating to your pensions, protection, and estate planning, and your family will need to refer to this when organising your estate. You may also need to access this information if you want to make changes to your financial plan.

It makes life much easier for everybody if all that paperwork is organised and filed away, but many people fail to do this. That’s why taking the time to get all your paperwork in order and update certain documents is an important financial housekeeping task.

This could also be a good opportunity to identify gaps in your financial plan. For example, you can check whether your protection is adequate or if you need to update your Lasting Power of Attorney (LPA) or will.

4. Prepare for the end of the tax year

When the new year begins, you still have a few months until the end of the tax year on 5 April 2024. It may be useful to consider ways to make the most of that time and ensure that you don’t miss out on opportunities to grow your wealth.

For example, there are several important allowances and exemptions that you may want to use up before the new tax year begins. These include:

  • Pension Annual Allowance
  • ISA Allowance
  • Capital Gains Tax (CGT) Annual Exempt Amount

If you don’t use these allowances and exemptions by the end of the financial year, you could miss out on certain tax benefits. Consequently, you may want to increase pension or ISA contributions in the coming months to use as much of your allowance as possible.

Additionally, the CGT Annual Exempt Amount is set to drop from £6,000 to £3,000 on 5 April 2024 so it may be beneficial to sell or transfer ownership of any assets before then. This could potentially reduce the tax you pay on any profits generated.

5. Check your investments

Checking your investments too often can be problematic because it may lead to panicked decisions, especially during a period of volatility. However, it is still important to review your investments from time to time to make sure that your financial plan is on track.

As the new year approaches, it may be a good time to check:

  • How investments have performed over the last year
  • What fees and charges you are paying
  • Whether your current investments still align with your financial plan.

If you have questions, it may be useful to consult a financial planner when you review your investments in the new year.

Get in touch

We can offer guidance on these important financial housekeeping tasks and even more in the new year.

Please give us a call on 01276 855717 or email today.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

Wills and Lasting Power of Attorney (LPA) are not regulated by the Financial Conduct Authority (FCA).

HMRC practices and the laws relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

Approved by the Openwork partnership on 12/12/2023.