NFU Mutual’s top tips for dusting off your finances this year.
The pandemic caught us all off guard – no one could have predicted the impact on stock markets, people’s lives, and, of course, their finances. We take a look at some simple steps this new year that could help you on the road to financial security.
1. Check the value of your home and valuables against the amount you’re insured for.
New pieces of furniture, tech or garden equipment can add up, and new purchases might add up to more than your current contents cover. And it’s worth remembering that the value of certain items, such as jewellery, art and wine can fluctuate even in a short space of time, due to factors such as scarcity or desirability.
2. If, like many people, you carried out a property extension or renovation work over the past year, it might be time for an insurance re-valuation to make sure the rebuild cost is accurate.
Don’t forget, the rebuild cost isn’t the same as the property’s current market or mortgage value, and can be affected by the cost and availability of materials, labour and skills, which can change significantly over time.
3. Review your investments and whether you’re holding too much in cash – could it be time to invest your cash rather than leave it in a low-interest bank or building society?
You may miss out on the potential to grow your money by keeping it in cash, particularly if the interest rate doesn’t keep up with inflation. Now could be a good time to consider whether investing for the longer term is something to think about. However, it’s always worth remembering the importance of having a financial cushion for an emergency, such as losing your job.
4. Review your pension plans.
Thinking about your pension early on may be the difference between living well or struggling when you choose not to work. Simply put, you should consider paying in as much as you can as early as you can. A personal pension has the potential to grow over time and it may surprise you how much of a difference it can make if you start investing for retirement now.
A big advantage of investing in a pension is the tax relief, for every £80 you pay in, the government will add an additional £20. If you pay higher rate tax, you can claim back up to an additional £20 from the taxman. But remember that the tax treatment of pensions depends on individual circumstances and may change in the future. Taking care of the long-term financial security of you and your family is an essential and not merely a ‘nice to have’.
Remember, the value of pensions and investments can fall and you may get back less than invested.
If you need financial advice, you could choose to speak to one of our Financial Advisers who can offer expert financial advice based on your personal circumstances and goals. Locate your local NFU Mutual Financial Adviser, or call us on 0800 622 323, option 3.