The start of 2015 saw plenty of economic-related anxiety all around the world and throughout Europe, but nowhere more so than Greece. The downturn struck the Greeks hardest and the new government has struggled to support its people. The rest of Europe has also been affected, as indeed has the US and China at the tail-end of this global recession. So: what did we learn from it all?
The financial lessons for the average person of the past year in particular have been many and varied. Not just, as some might say, that bankers, as a rule, are not to be trusted by ordinary folk. The tougher financial climate has taught us – over-confident countries and individuals alike some lessons that could potentially be of exceptional use in the coming year. Read on to brush up on the many things we learned about money in 2015:
1. Always Pay Your Taxes
The famous saying goes:
“In this world nothing can be said to be certain, except death and taxes.”
This was originally quoted by Benjamin Franklin in 1789 and pretty much nothing has changed about the truth of his quote since then.
2015 was another year that reminded us that even though we may not like them, it is taxes that pay for our schools, armies and hospitals. Therefore, whether we are a big fish or a minnow, we should all remember that taxes are there to be paid for a reason (and that includes big, famous coffee shops and world-conquering IT companies).
2. Stay Safe as Houses
Don’t make reckless property gambles as they are likely to lead to disaster. We are still feeling the after-effects of the sub-prime mortgage fiasco. Houses should be regarded as homes first and foremost, not investment opportunities, or worse, gambling chips.
3. Work as Long as You’re Able
It may be nice to retire in the sun in your 40s, but there is a good reason why most people don’t…Prepare to work to a realistic age in relation to your income. Only business magnates and football stars can retire as early as most of us might like. Keep it real, or face the consequences.
4. Lighten the Debt Load
Don’t go into the next year saddled with unbearable debt. Free yourself up financially by lightening the load: resolve to pay off the most toxic debts or unarranged borrowing as soon as possible. Create a plan that will enable you to pay any remaining debt down in the quickest and most effective manner: getting rid of debt is a real priority.
5. Plan for Your Retirement
Get a pension plan in place. It does not have to be one of the much-derided conventional pension arrangements that deliver worryingly diminishing returns, just something solid that will support you and your loved ones when you reach pensionable age. As we are all living so much longer, this is an absolute must.
6. Compare and Swap Suppliers
If you haven’t done it yet, make 2016 the year that you go on comparison websites as much as possible for utility bills and more. Everyone should now try to swap around so that they get the best deals for bills; in fact, water and energy suppliers fully expect people to do this so now swapping over can be much easier than it once was and you could literally save thousands of pounds per year. Don’t be shy, try www.moneysupermarket.com or Go Compare for starters and don’t log off until you have saved yourself some money.
7. Save Smarter
If you are in the lucky position where you have savings, then use up all of your ISA allowance if you can so that you benefit from tax-free savings as fully as possible. These schemes can make a great difference if you try to take proper advantage of them.
8. Pay Off Mortgages Faster
Again, if you are lucky enough to be able to afford to do so, so overpay your mortgage whenever you can. Even just an additional £50 per month can reduce your mortgage term by years. This is financial planning of which you will certainly feel the benefit when the time comes, so try to think of the huge long-term plusses. That £50 per month will make far more difference to your life than an indifferent piece of clothing or unnecessary £50 lunch somewhere.
9. Little Financial Savings Add Up
If all the bean-counting sometimes seems overwhelming, break down your financial planning into small, manageable amounts. Think of daily/monthly/annual consequences as you plan to make savings. For example, a daily coffee at a well known coffee chain may see small, but it costs £2.80. If you grab one every day on the way to work then that costs you £56 per month, or roughly £672 per year. Skip the daily coffee-shop bought beverage and you can save enough per year to cover a trip away, or perhaps a month of your mortgage; no little saving. As the supermarket slogan goes, every little counts.
10. Plan Ahead with Confidence
Finally, we have learned one of the biggest lessons of 2015, in financial and other respects: we must not be afraid. Do try to have a plan, don’t bury your head in the sand and just hope that everything will be ok. Become friends with the spreadsheet and move money around so that can you can manage everything that comes your way, including count birthdays, Christmas, holidays and so on. If you try to plan ahead then you will be able to face the future with far more confidence, and rightly so.
A Prosperous New Year
If you take each of these tips seriously, then you could find yourself make a massive difference to your finances in the coming year. The best route to take on 2016 in confidence involves writing a financial planning ‘must do’ list and noting how best you can implement each of the changes above in such a way that you gain the maximum benefit for you and your loved ones. The upshot will be a brighter, more enjoyable future that starts when the clocks strike midnight and 2016 begins. Here’s to a very Happy New Year!