Get your finances in shape for 2021

03 February 2021
Plant growth



It’s a new year, certainly many people are glad to see the back of 2020 and all of the challenges that it brought. Hopefully now there will be a smooth rollout of an effective Covid vaccine and we can all get back to life as we know it. There is a huge pent-up demand for consumer spending, holidays, general socialising and simply enjoying ourselves again! While this is perfectly understandable and indeed to be welcomed to help get our economy motoring again, it comes with some risks too.

We want to highlight a few notes of financial good sense as we all start to live our lives at top speed again.


Stick to your long term plan

Your long term financial plan is based on your goals in life, whether they be retiring at a certain age, gifting money to your family or a major purchase in the future. Don’t lose sight of this long term plan and the carefully constructed investment and retirement portfolio to help you achieve your objectives. Continue those great habits of not thinking in the short term, not trying to out-guess the direction of investment markets and by keeping your savings levels up to achieve all of those goals in life.

Yes, everyone deserves a bit of brightness in their lives after a pretty dark 2020, but don’t derail your long term plan in the process.


Have a spending plan…and a budget

Yes start living life again, but do it in a financially responsible way. Don’t go on a mad spending binge that you’ll then regret for the next year and beyond.

You’ve a good idea what your income will be for this coming year. You also know what your committed outgoings are too – in calculating these look at your mortgage and debt costs, transport, energy and services costs, school fees and the likes of insurances. We also suggest that your savings and retirement funding costs should be included here.

After them, you’re left with your discretionary income – plan your spending splurge around this remaining amount only…


Pay yourself first

What’s one of the most effective strategies that we see by people looking to build up a cash nest-egg, to save regularly for a significant purchase or to save towards retirement? It’s a simple habit of “paying yourself first”. This entails deciding your regular saving amount and setting this up to leave your current account immediately after payday, as opposed to saving “whatever’s left”  at the end of the month. Money left resting in a current account is just crying out to be spent… and this is what usually happens.

When you pay yourself first and the money leaves your account, it’s amazing how we adapt our spending to the lower amount available.


Use your credit card wisely

We don’t subscribe to the idea that credit cards are bad, but only when they are in responsible hands. Apart from your annual credit card fee, you’re probably not incurring any other charges, at least not on domestic purchases. On the other hand, using a debit card, writing cheques and going to the ATM all incur charges. So credit cards are a convenient and cost effective means of making purchases.

But credit cards also allow you to spend beyond your means, and you are charged extremely high interest charges for the pleasure of doing so. If you are disciplined

get rid of the credit card – those interest charges will quickly dwarf any savings on bank fees.


Minimise your biggest bill – tax

Look for every legitimate way to pay less tax. What credits can you claim, are you claiming all of the refunds due to you for health expenses and other allowable costs. Can you afford to save more towards your retirement and minimise your tax bill as you do so? Are you gifting money effectively to your family?

There are so many different ways in which we are taxed, each with a range of tax mitigation opportunities. These take careful planning. So whether you are saving for retirement, looking to extract money from a business, transferring wealth to your family or looking to simply reduce your annual income tax bill, there are potential routes to reducing your tax bill. Tax based strategies sit at the heart of an effective financial plan and are a core element of WealthPlan from Invesco.


We’ll be delighted to help you get your finances in great shape for 2021 – please contact your Invesco consultant or contact us via the details below.