Monday 29th December 2008
By Rachel Jones
Know Your Money Editor
Britons are making financial new year's resolutions when it comes to organising their money situation, according to Halifax. The bank discovered that over half of adults in the UK think that visiting a personal financial adviser could help them with their debt management. However, 53 per cent of people surveyed still rely on the advice of their friends and family instead of professional information.
"Most of us religiously hit the high street for the pre-Christmas rush and the new year January sales, but too few of us include banking products in our bargain hunting," claims Karen Crowshaw, managing director of Halifax Financial Services.
"By making a few small changes today and seeking the appropriate advice, you could make some significant financial gains in the future. In light of the recent financial climate, it has never been more important to seek out the best product deals available," she adds.
So what ways can households boost their financial coffers and avoid slipping further into the red during 2009?
Save, don't spend
Saving is the key message which Alliance & Leicester is currently pushing. According to the financial services firm, 13.5 million Britons have failed to save a penny during 2008. With 18 per cent of people admitting that they have had to dip into their savings accounts to pay for rising living costs, it could appear difficult as to how households are expected to save during a recession. Indeed, a quarter of UK adults have told the bank that stashing more cash is one new year's resolution that they are hoping to stick to. Cutting back on spending is also a goal that 26 per cent of people questioned hope to meet over the next 12 months.
Hetal Parmar, manager for savings at Alliance & Leicester, says that such financial resolutions came above finding love and quitting smoking.
"It's encouraging to see Brits are becoming more aware of the importance of a savings pot. When it comes to the crunch, it makes a big difference if you have a financial cushion to fall back on," he claims.
Indeed, Mr Parmar advises people to set up a standing order of £10 a week from their current account into a savings one. Halifax, meanwhile, says that regularly making small overpayments on a mortgage could be beneficial, not only by saving money in the long run but by also reducing the repayment period. And setting up an individual savings account, or ISA, can see households avoiding paying tax on interest earned on savings.
Make a budget and stick to it
No-one wants to see in next Christmas with the weight of debt even heavier than it was before, but there are ways to avoid slipping further into the red. Visiting a financial adviser - who may recommend solutions such as a debt management plan or consolidation loan - could be a wise move for Britons to make. According to Halifax, 54 per cent of individuals surveyed believe that the advice of a professional would be most beneficial for people aged between 20 and 30. As such, the bank notes that £449 is the average amount of debt that people who used store cards, loans or credit cards to fund the recent festivities expect to be left with in the new year. Although over 70 per cent of individuals claimed that they would pay for Christmas with their income, five per cent admitted that they would use a loan, 14 per cent said they would turn to a store card and 35 per cent said a credit card would cover their costs.
As such, Alliance & Leicester claims that people have better intentions for 2009. While one in ten state they will start planning their savings schedule for the very first time, 32 per cent hope that this year will see a larger nest egg than they built up in 2008. However, 23 per cent feel that they will have no spare cash next year and will therefore be unable to put money away.
Keeping a clear head
The Times notes that people may take the chance in the new year to boost their household coffers by tracking down thousands of pounds that could be lying around in forgotten savings accounts and inheritances. But the newspaper urges caution. Consumers should not disclose personal information about themselves to unsolicited parties or correspondence and those who suspect a scam should contact Consumer Direct on 0845 4040506. This can also be done online by using the scam form available at ConsumerDirect.gov.uk.
Britons looking to stay financially afloat during 2009 may want to contact a financial adviser or visit their high street bank in order to gain reputable advice. Not only could such professionals recommend ways to pay off debt and stash much-needed cash, but they may advise against seemingly legitimate windfalls that could turn out to be anything but.
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