With time on your hands, furloughed or stuck at home, it is worth having a review of your finances.
One of those jobs which are finally managing to reach the top of the things to do list.
Here are a few ideas which we have talked about in the past but are now hugely relevant in the current trying circumstances.
Areas worth considering are:
Pensions – detail all your pension schemes … current active ones, benefits with former employers, old personal pensions. Understand what you are likely to get at retirement and what you might do to improve the position. The Government’s online Pension Tracing Service can help you track down any lost money. But you will first need the name of an employer or pension provider.
Employee benefits – can you access death benefits, ill-health benefits and the like through your employer? Potentially vital in the current climate. Looking further ahead, your needs will change as you get older so it is worth carrying out an assessment of whether you are making the most of what is on offer.
Savings – make a list of all bank and building society accounts. What’s where? What interest rates are they paying? A savings account may have a half-reasonable initial rate but after the introductory period, the bank will most certainly drop it. Many are now at abysmally low levels. Meanwhile we are sitting on billions “lost” in dormant bank accounts – accounts banks have archived because they have been inactive for ages. The easiest way to re-trace lost or dormant bank and savings accounts is to use the mylostaccount.org.uk service, run by the British Bankers’ Association, Building Societies Association and National Savings and Investments.
Life and health insurances – check what policies you’ve got and what cover they provide. These could come into play big time in the current coronavirus turmoil. They may prove a financial saviour if you fall ill. If the worst happens and you succumb then the family should be looked after.
Investments – lots of people have investments that they’ve held for a long time and have never been reviewed. Shares, investment funds, and the like. Are they performing? Weed out consistent underperformers but don’t throw baby out with the bath water – plenty of good shares are way down at present. It takes a lot of time to follow an individual company, its progress and the different risks it faces. The money could instead be put into a fund, for example, which could have someone else – the fund manager – do the research for you.
Mortgage, loans and credit cards – clear your overdraft if you can. This month banks changed their charging regime, with customers paying an eye-watering 35-40 per cent on both arranged and unarranged overdrafts. As a temporary coronavirus measure, the Financial Conduct Authority has ordered a freeze both on overdraft interest charges and credit card repayments. However this will only last for three months.
Tax – is your tax code correct? Your tax code is listed on your ‘coding notice’, payslips or P45s. Every time your circumstances change – whether it’s a promotion at work with a larger salary, new employee benefits, taking on another job, giving up work to have children or leaving the country and the UK tax system altogether – your tax code may change too. So it can be worth getting in touch with HMRC to check. Can you reduce your tax, perhaps via pension contributions or through the marriage allowance?
Put all your interests down on paper. If nothing else having an up to date list in the same drawer as your will makes it much easier for executors.