Getting a fresh start from your finances might seem impossible. Your debt won’t magically disappear, your investments won’t suddenly change, and your income doesn’t just double overnight – unless you get an amazing promotion of course!
But, sometimes it’s good to create your own fresh start. The new financial year is the perfect opportunity to do that. The new year only began on April 6, so it’s not too late to make the most of it.
If you want a fresh start, but aren’t sure how to make the most of it, this post is for you.
- How a fresh start can help your finances
- Get inspired
- Plan, plan and plan some more
- Make the most of your ISA allowance
- Get your taxes in order
- Check for any changes
How a fresh start can help your finances
A fresh start is so often one of the best things we can have in most aspects of our lives. A financial fresh start is no different.
Too often we get bogged down in the minutiae and monotony of every day life. Our expenses never seen to decrease and our financial situation never seems to improve.
This is where taking some head space can help. Draw a line under what has already happened – you can’t change it. Take a deep breath and start looking forward.
To make the most of your fresh start you need to think big. It may be difficult, but try to see beyond your current circumstances.
What would you like to do in the next year, next 5 years or even next 10 years? While it’s important to be realistic – I’m probably not going to be living in a huge mansion in Mayfair – it’s also good to dream big.
With a bit of luck and some careful planning, you can achieve an awful lot more than you think.
Plan, plan and plan some more
Once you’ve worked out what you want to achieve, then you need to make a plan. How are you going to reach your goals?
Maybe you need to increase your income. A promotion is one of the easiest ways to do this, but this isn’t always possible – particularly in the current economic climate. This isn’t your only option, however. You can increase your income through side hustles or make money online.
Another option is to decrease your expenses. Creating a budget will help you decide if this is an option for you.
Personally, I find creating a new spreadsheet is really helpful. I have one to track my freelance income and another to keep track of my monthly budget and savings.
Some people like to use apps to do this for them. So far, I’m yet to find one that works for me, but if it works for you then go for it!
Make the most of your ISA allowance
ISAs are your friend.
The vast majority of us simply won’t be able to put £20,000 a year into an ISA. The average salary for people in their 20s in the UK is £25,980 after all!
But, you don’t have to max out your ISA allowance to reap the benefits. Any money you save in an ISA is tax free. While interest rates are so low, this probably won’t make much of a difference on your cash savings.
But, it could make a big difference on any investments you make. You won’t have to pay Capital Gains Tax on any profits you make within the ISA.
If you’re not sure about which ISA might be best for you, check out this post where I detail the main options.
The ISA year refreshes each financial year. So, unless you’ve been really organised already, you now have another £20,000 you can pay in.
Get your taxes in order
Taxes – everyone’s favourite word!
If you’re not self-employed and are on PAYE, and don’t make more than £1,000 a tax year from side hustles, then skip this section. Your taxes are sorted for you.
For those who do need to complete a Self Assessment tax return, you need to make sure you start a new set of accounts – or at least mark the start of the new year. This will make it much easier when it comes to filing your tax return.
I like to start a new spreadsheet, where I keep track of all my income and expenses. I also create a new folder, where I keep invoices, receipts and other important documents.
Closing off last year’s accounts is also helpful. I make sure everything is added up correctly and is ready to go, when the time comes to file my tax return. This might not always be straightforward, as often you find yourself chasing up payments which should have come through months ago.
Check for any changes
The start of the new financial year often brings changes.
It’s not only your taxes that might change. For example, this year brought energy price increases too. From 1 April this year, the average household will pay £96 more a year for their energy.
Being aware of this – and any other changes – is key. You can avoid this increase, and save even more money, by switching providers.
A more positive change is the increase in the personal income tax allowance. You now don’t need to pay tax on the first £12,570 you earn, meaning most of us will have a bit more money in our paycheque each month. Sadly, this will be the only increase for the next five years, however.
It’s also important to look out for any other changes that might take place. Keeping on top of these will help you avoid increasing your expenses, which can be a massive blow to your budget otherwise.
Have you spotted any other changes yet this year?
If you found this post interesting, please like it and share across social media or send it to your friends. I’d also love to hear your thoughts and experiences. Are you making the most of the new financial year? When has a fresh start worked out in your favour? What are your goals for the new financial year?
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