Students have returned to university and the kids are back in school – but are there some ways you could brush up on your own financial education?
Having a few money skills in your back pocket can be crucial for making good financial choices throughout life – and it’s never too late to get to grips with things.
Adam Bullock, UK director at TopCashback, shares some quick and simple ways for people to upgrade their financial knowledge…
1. Get to know your payslip
Payslips may not be the most exciting things to look at, but Bullock warns that those who don’t check them regularly could risk missing something important.
“You could, month-in month-out, be staring at a maze of numbers without knowing there was a mistake,” he says. “This might mean paying too much or too little income tax or pension contributions, for example.”
People who work for an employer pay tax through a system called ‘pay as you earn’ (PAYE). Bullock adds: “At the end of the (tax) year, you will get a P60 which details the total amounts paid to you, as well as deducted from you, like a receipt. If there’s any part of your payslip that you don’t understand, it’s really important to speak to someone in the payroll department of your company.”
It’s also important to keep P60s handy, in case you need to show how much tax you’ve paid in the past.
People who are self-employed, meanwhile, will need to fill in a self-assessment tax return for HM Revenue and Customs (HMRC). The deadline for submitting paper tax returns is October 31, 2023 and the deadline for submitting online is January 31, 2024.
2. Get on top of your budget
Whether you’re budgeting for the winter bills ahead, or planning a holiday for 2024, each month contains different financial priorities – so it’s helpful to adjust and keep on top of your budgeting as you go.
“Often the same budget won’t work for every month, and there may be unanticipated expenses you might not have considered,” says Bullock.
“Compile a list of your fixed monthly outgoings, which could include anything from your bills to your average grocery order. From this, you can work out a budget and know exactly how much you have left each month to either spend or put into a savings account to help achieve your financial goals.”
To make budgeting easier, he also suggests making the most of free apps and online tools.
3. Explore your savings options
Savings rates have jumped in recent months as the Bank of England base rate has climbed, so now is a good time to see what’s on offer. Many websites will give you a rundown of the top rates available, but it’s also useful to understand the different types of savings accounts available.
Bullock says: “There are lots of different types and forms of savings, from tax-free options to investments and fixed-term bonds.”
Adults can also save up to £20,000 annually into a tax-efficient Isa. “A cash Isa could be a good option if you think you will need to access money at short notice,” adds Bullock. “If you are looking to save for the longer term, a stocks and shares Isa might be a better option for some.”
There are risks to funds going up or down with stocks and shares, however. “So take your time, weigh up the pros and cons, and then decide the best course of action for you,” adds Bullock.
4. Consider the long-term
The cost-of-living crisis may be making juggling day-to-day finances difficult, but it’s also important to think about the longer term. A simple way to make preparations for the future is to save into a pension.
If you’re an employee, you may have been automatically placed into a workplace scheme. However, if you’re paying in just the minimum, bear in mind that for many people, this will not be enough for a comfortable retirement. Check out the Pensions and Lifetime Savings Association’s retirement living standards for an idea of how much you might need to save (retirementlivingstandards.org.uk).
For some people, saving more into a pension just isn’t possible at the moment. But there may be times when you can increase your pension contributions without it being too financially painful – for example if you get a pay rise, or for parents, as and when you’re spending less money on childcare.
Bullock says: “Some employers will agree to pay more into your pension pot if you agree to increase your contributions too. Your employer will be able to answer any questions around the pension benefits they offer, as well as the level of contributions they might make.”
Seeking financial advice may also be wise. Plus, over-50s can make use of the free Government-backed Pension Wise guidance service.
5. Be a savvy spender
When you’re making purchases, check any opportunities for cashback or discount vouchers. Internet browsers also allow you to install ‘plugins’, which can automatically find coupon codes for websites at the checkout. Bullock adds that certain payment methods may also help you to budget.
“Having a set amount of physical cash in your wallet per week or per month can help you track your spending,” he says. “So, the next time you pop to the shop for ‘just one thing’, you will be more likely to stick to that one thing when you can see how much you have left.”