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Nowadays many people manage their finances electronically via the internet. This gives you an instant online record of your transactions, although you should ensure this is best for your personal circumstances and that you are comfortable to deal with your bank in this way.


BANK OR BUILDING SOCIETY ACCOUNT?


There are different types of current accounts available and all have their pros and cons, making the choice of what suits you confusing at best. “Best buy” tables in the financial pages of newspapers and magazines can be a guide but tend to focus on the benefits of being in credit. Remember that the account you choose has to be right for the way you intend to manage your account.


INDIVIDUAL SAVINGS ACCOUNTS


These are tax-efficient accounts that allow you to save up to a certain amount each year. From April 2017, the limit to the amount you can save has been set at £20,000.

With an Individual Savings Account (ISA), you can invest up to the limit in cash, or in stocks and shares, and you can switch your savings between the two should you choose. So, if you did decide to invest the maximum amount, you could divide the money between your cash ISA and your stocks and shares ISA. The tax efficiency of ISAs is based on current rules, and the current tax situation may not be maintained. The benefit of the tax treatment depends on individual circumstances.


CREDIT CARDS


A credit card used wisely can help you with cash flow and take advantage of the interest-free payment window. However, if you don’t repay your bill in full each month it can be a very expensive form of borrowing. Remember too that forgetting to make a payment, or just paying the minimum amount each month, can have a negative impact on your credit score.

Equally, transferring an existing balance on to a 0% interest card can be a good idea for some. If there is still a balance at the end of the free period, you could of course look to transfer the balance to a new card with another 0% balance transfer offer.


BUDGET PLANNING


The old fashioned way to budget is to list all of your income on one side of a piece of paper and outgoings on the other. If you put this into a simple spreadsheet this will work out the figures for you as you go along. Nowadays there’s plenty of personal finance software available on the internet. Smartphone users can also download budgeting apps. Some, usually those with a cost attached will “sync” the data across different compatible devices so that you can update the information wherever you are or between different users.

You can also use the calculator on The Money Advice Service website.


MAKING YOUR BUDGET WORK FOR YOU


Using a budget planner allows you to prioritise your spending. Rather than just spending first and then reconciling your incomings and outgoings, a budget planner enables you to see whether you can indeed afford a planned holiday or replace a household appliance. A good budgeting plan, therefore, means moving money from one side of the balance sheet to the other, ideally reducing outgoings to make saving easier.


BORROWING MONEY


In certain circumstances borrowing is a sensible option. This could include taking out a mortgage to buy your own home, or a student loan to pay for a university education that improves your future earning capabilities. Borrowing from one source to pay off another is a tricky and potentially dangerous path to follow. This is particularly true if you decide to take some of the higher interest charging finance options (such as a payday loan) to make repayments on existing loans or credit card bills. Bear in mind too, that using such a facility could have a negative effect on your credit score.

If the situation has gone too far and you have serious debt worries, seek help from one of the free debt counselling charities, such as National Debtline, or Citizens Advice.

If you have any questions, please contact our friendly team on 03300 244612.

Family Building Society
Ebbisham House
30 Church Street
Epsom
Surrey KT17 4NL
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