Make 2022 less taxing – the financial habits to get into.
There’s no better time than the New Year to get into good habits that will make a real difference to your life. Financial goals are an ideal place to begin, not least because they’re often attached to tangible positive outcomes.
“Getting into good tax and financial habits will make your life so much easier,” says Tony Clark, Senior Propositions Manager at St. James’s Place Wealth Management. “The key is to form new habits that make your good intentions stick, to the point that you don’t even know you’re doing them.”
Here are five simple but effective habits to get into before the end of the tax year:
1. Make the most of your allowances
All of us have allowances we can use that help our money go further. Many of us have ISAs, but there are other possibilities that can be overlooked and left unused.
“Make sure you’re not missing out on the allowances that you can benefit from,” says Clark. “Are you using what you’re entitled to, such as carry forward on your annual pensions allowances or gifting for Inheritance Tax?”
In other words, find out what’s available and what you could benefit from. You might be missing out on a real money-saving opportunity.
2. Get organised
This is about controlling your money rather than letting it control you. Downloading the HMRC app is a good place to start, says Clark.
“There’s loads of information on there that people might not be aware of, so it’s very useful. You can use it to keep track of your records, and stay on top of things such as your tax code for example.”
3. Seize the day
The tax year may not end until 5 April, but there’s no need to create deadline stress by leaving everything until the last minute. There are practical reasons for taking action sooner rather than later, such as the additional time it can take providers to process transactions at tax-year end.
Whether you need to top up your ISA, make extra pension contributions or put other changes in place, it’s worth carving out time well before April. After all, you don’t know what else will be on your to-do list by that point.
4. Get your papers in order
The ranks of the self-employed swelled during the pandemic, putting more people in the self-assessment system. The January deadline for online self-assessment returns can trigger a panicked search for the records and information you need to get your facts straight. Get into the habit of keeping your paperwork up to date and you’ll make life much easier come self-assessment time.
“It’s easy to miss the deadline and incur penalties that you might otherwise have avoided. If you’re self-employed, your personal finances will be inextricably linked to your business, so you’ve got more work to do,” says Clark. “It’s especially important to be organised and get advice.”
5. Speak to an adviser
This is perhaps the best habit to get into and the step that will drive other good financial habits.
“A regular check-in with your adviser will give you the impetus and momentum to keep on top of everything,” says Clark. “They will help you with gentle reminders and ask the questions you need to think about.”
When it comes to financial and tax matters in particular, getting into good habits so that they become second nature can set you up for the rest of your life. Now is the time to start.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.