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10 tips to achieving your financial goals

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Time to diagnose your money situation with a financial health check?

Even if you have a solid financial plan, it must be updated regularly to ensure it reflects any life changes.
But what should your priorities focus on now? Is it time to turn your attention to your pension, ISA, mortgage, or something else?

Should you consider investing more in your children’s education or putting an estate plan in place? And then there are those previous company pension schemes to review—is it three, four, or five? If you’re unsure what diagnosis to give your current money situation, maybe it’s time for a financial health check. But where do you start?


You need to know exactly how much you owe, how much interest you pay, and to whom. Suppose you already have a credit card or loan with a company. In that case, it is unlikely to allow you to take out a further loan or credit card to consolidate your debts – and you could end up with a rejection footprint on your credit record that will deter other lenders. If your debts are restricted to one or two credit cards that incur interest, the cheapest option is probably to transfer the balances to a zero-interest credit card deal.

Suppose your debts are too large to move to one credit card account. In that case, you could move as much as possible to a zero-interest credit card deal, pay the minimum allowed on this account, and concentrate on paying the more expensive debt you could not transfer. Alternatively, you could apply for a personal loan to cover the entire amount. Once you have added up all the debt, determine how much you can reasonably afford to pay off each month.


Without a budget to monitor your spending, you won’t be able to track where your money is going. When you feel financially out of control, the knee-jerk reaction is to cut back. Your budget will ensure your money does what you’re telling it to do. Tracking your finances gives you a baseline to help track your progress and helps you to see spending mistakes before they become disastrous personal finance problems. Once you get into the habit of tracking your expenses, you’ll find that the process makes you more mindful of your spending choices throughout the day.

One of the most significant sources of financial stress for some people is the eternal question of where all the money went. By tracking your expenses rather than feeling like everything is out of control, you can transform the question into personal decision-making – something far less stressful. In short, tracking your expenses gives you control over your finances. You’re no longer just along for a financial roller coaster ride. Many different iOS and Android budgeting apps are designed to help you keep track of your finances from your phone.


There are several allowances for the 2020/21 tax year – the tax year runs from 6 April to 5 April. The Income Tax personal allowance, which you can earn tax-free before you start paying Income Tax, is £12,500.

The tax-free dividend allowance is £2,000 for the 2020/21 tax year. On dividends above the £2,000 threshold, basic-rate taxpayers pay 7.5% tax, and higher-rate taxpayers pay 32.5%. Additional-rate taxpayers will be charged 38.1% tax on dividend income over the allowance. The dividend tax does not apply to investments in an Individual Savings Account (ISA) or a pension.

Every year, you can take advantage of your Capital Gains Tax allowance. In this 2020/21 tax year, you can make gains of £12,300 before you start paying Capital Gains Tax. Lower-rate taxpayers pay a 10% tax on capital gains, and higher and additional-rate taxpayers pay 20%. The only exception is for second properties, including buy-to-let investments. Capital gains on these investments will be taxed at 18% for basic-rate taxpayers and 28% for higher and additional-rate taxpayers.

Pension contributions receive full Income Tax relief; this means it costs basic-rate (20%) taxpayers £80 to save £100 into their pension, while higher-rate (40%) taxpayers only need to pay £60 to save £100. The lifetime pensions allowance for the 2020/21 tax year, in line with inflation (Consumer Price Index), now stands at £1,073,100.

In 2020/21, most people can contribute up to £40,000 to their pension, known as the annual allowance. For ultra-high earners who earn an adjusted income of over £240,000, the yearly allowance tapers by £1 for every £2 of income to a minimum of £4,000 per year—the taper threshold is currently £240,000.

You can save a total of £20,000 in an Individual Savings Account (ISA) this tax year, where all your earnings will be tax-efficient. Tax-efficient investing means you won’t pay Income Tax, dividend tax or Capital Gains Tax on any investments you hold in an ISA. The limit applies to Cash ISAs, Stocks & Shares ISAs and Innovative Finance ISAs, and the allowance can be spread among the three types.

You can save £4,000 a year into a Lifetime ISA, which can be used to buy a first home or retire. If you’re looking to buy a house, there’s also the Help to Buy: ISA, which is no longer available for new savers. Those who opened a Help to Buy: ISA before the ISA closed to new savers in December 2019 can save up to £3,400 in the first year and then £2,400 each year afterwards.

The Junior ISA allowance for the 2020/21 tax year is £9,000. This same limit applies to Child Trust Funds (CTFs). It has previously risen every year in line with inflation.

Basic-rate taxpayers can now earn £1,000 from savings before paying Income Tax on savings income. Higher-rate taxpayers start paying tax on savings income over £500. There is no savings allowance for additional rate taxpayers.


Regular monthly investing promotes the discipline of saving, whereby a small amount invested every month over several years can build into a sizeable nest egg. Regular contributions are generally taken by people who don’t have a large amount to invest at once or by those who are more cautious about investing a lump sum and prefer to drip-feed their money into the markets.

Investing monthly can also be a particularly effective way to invest during volatile markets, as we’ve been experiencing this year. A monthly direct debit takes the emotion out of investing, which can be invaluable during extreme volatility. Investing monthly also means that you don’t see the value of your investment change so dramatically, which can help you stay focused on your long-term goals.

With a market correction, your regular payment will acquire more units. When the market rises, you will acquire fewer units, but the units you bought in previous months will be worth more. This smoothing out of investment returns is known as pound-cost-averaging. As your circumstances change, you can adjust your regular savings amount. Ideally, you should look to increase the amount as your salary increases, but you have the flexibility to reduce it should your income fall.


To get the income you want during retirement, it’s essential to regularly review the amount you’re contributing towards your pension savings. However, you need to be aware that inflation can steadily erode the value of your contributions over time, so it’s essential to review them regularly.

A pension is one of the most tax-efficient ways to save. Topping up your pension will help improve your financial security in retirement, and saving a bit more now could make a big difference to your future. The way the tax relief is given will depend on the type of pension scheme you’re in and whether you use salary sacrifice.

Many pensions allow you to increase your monthly payments by 3-5%. They’ll likely stay in line with inflation without you having to worry about it. You should consider a larger increase if you receive a pay rise.


Failing to plan is planning to fail. How often do you set goals? How often do you revisit your list of goals? We all know that setting goals is important, but we often don’t realise how important they are as we continue living. Focusing on your goals can help ensure you aren’t distracted by current daily events not to prompt you to veer off course.

Financial planning is about setting short-, medium–, and long-term financial goals and creating a plan to meet them. It is important to have a solid understanding of your finances and how to reach your goals. Setting goals helps trigger new behaviours, guide your focus, and sustain momentum in life.

How will your life be different in a year? Do you have the security of knowing where you’re heading financially? Will you be able to maintain your current lifestyle once you stop working? Have you made sufficient financial plans to live the life you want and not run out of money? Do you have a complete understanding of your financial position? What is the number that will secure your current and future lifestyle? Focusing on what you want to achieve makes you much more likely to reach your goals.


Don’t let the coronavirus (COVID-19) pandemic derail your financial plans. Investing in your future will always have some bumps, but as volatility emerges and emotional anxiety sets in, you may veer towards flight instead of fighting.

Now is the time to improve your relationship with money and its role in your life, to seek a happier, more fulfilled existence. Instead of making knee-jerk reactions, it’s essential to take time to consider your long-term plans and take deliberate steps that can further your long-term goals.


Take the time to review your investments and look for opportunities to diversify. Your investment strategy could determine your financial success for years, so having a broadly diversified portfolio is essential. Diversification can be summed up as not putting all your eggs in one basket. If one investment loses money, the other will compensate for those losses.

You diversify by investing your money across different asset classes, such as equities, bonds (also referred to as fixed income), property and cash. Then, you diversify across the different options within each asset class. Diversification lowers your portfolio’s risk because different asset classes do well at different times. It is your best defence against a single investment failing or one asset class performing poorly. Having a variety of investments with different risks will balance out a portfolio’s overall risk.


Remember, as the old investment adage goes, time in the market, not timing the market, is typically key to long-term gains. Shock events such as the COVID-19 outbreak and related stock market volatility can cause investors to act on their emotions.

Putting a plan in place when markets turn south and reviewing that plan when emotions are running high can temper this impulse. Although short-term volatility swings can be difficult to stomach, long-term investors must persevere.

While it may be tempting to pull out of investment markets, you may miss out on a potential market rebound and opportunity for gains while you’re on the sidelines. During any period of volatility, thinking about your reasons for investing and what you ultimately plan to do with your money is important.


Reinvesting dividends is one of the most powerful tools for boosting returns over time. You can dramatically increase your annual returns and total wealth by reinvesting dividends. When an investment you own pays dividends, you have two options: either take the money and use it as you would any other income or reinvest it.

Although having the extra money on hand may be appealing, reinvesting your dividends can pay off in the long run. When you eventually reach the stage where you’d prefer to use your dividends to supplement your income, you can stop reinvesting the dividends and start spending them!

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