2020 is the year that most people would rather forget. The global pandemic has affected every aspect of life for most of the world's population, including their finances. How has your financial situation changed over 2020? Has it got better, worse, or stayed the same?

Spend Less and Build Wealth

Lockdown has proved that, provided you can maintain your income, you can save more and reduce or avoid debt when you spend less.

Outstanding UK consumer credit lending fell by just over £1 billion in October 2020 to £205.5 billion. And within that total, credit card debt represented £60.7 billion, a decrease of 16.4% in the year to October 2020. That's an average credit card debt of £2,177 per household and £1,145 per adult.*

UK households saved 27.40% of their income in the second quarter of 2020, which is an all-time high. Before falling back to 16.4% in the third quarter of 2020. That compares to an average annual savings rate of 8.62% over the last 65 years. **

Your 2021 Money Action List

The beginning of a new year is an opportunity to reset your relationship with money and improve your overall financial situation. Why not try to lock in reductions in spending that have happened in 2020 so you can accelerate becoming debt free or saving, investing and giving more in 2021?

Here's a simple summary of things to consider, together with links to the relevant blog or external resource. Don't feel you have to do all of these actions. Just pick two or three that will have the most significant impact on your happiness and financial wellbeing.

Note: The following is aimed at UK residents but many of the principles will apply to other countries too.

Use My Free Tools

The 8 Money Milestones, The Strategic Money Plan and the Smart Spending System to help you organise your money for 2021. Creating or revise your own spending plan (some call this a budget, but I'm not too fond of this word) should be your number one priority. The money coming in must equal the money going out. And your spending must reflect your values and priorities.

Check Your Expenses

Check you aren't paying too much for the essentials like utilities, property and motor insurance, mortgages or community charge.

Check Your Entitlements

Check to see you are getting all the state benefits to which you are entitled. Attendance Allowance and Carer's Allowance, for example, are among the most under-claimed benefits.

Tax Code

Check your tax code is right.

Cancel Unwanted Subscriptions

Cancel any unwanted subscriptions or services, including any on your mobile phone.

Pay Rise

Ask for a pay rise or look for a new job that pays you what you need and are worth.

Interest

Check to see you're getting the best interest on your savings.

Invest in Yourself

Invest in improving your skills and capability so you are more employable or can earn more money. Check to see if financial assistance is available.

Cheaper Insurance

Check to see if you can get cheaper life, income protection or health insurance by contacting my friends at Cura.

Sell Your Stuff

Sell unwanted possessions via one of the online platforms.

Review Your Will

Create or update your Will, Lasting Power of Attorney and pension death benefit nomination.

Help To Save

See if you qualify to open a Help to Save account. You only need to invest £1 initially.

Scrap the Cards

Close all credit cards to remove the temptation to spend money you don't have and flush out all those continuous payments for things you don't want or need. Don't believe any guff from your card provider that you have to cancel continuous payments with suppliers, as this blog explains.

Higher Employer Pension Contribution

Ask your employer if they would permit you to sacrifice some of your salary (or bonus) in return for a higher employer pension contribution. If so, check whether they'll add the employer's saving in National Insurance of 13.8% (of the employer's pension contributions). This article explains it in more detail.

Home Working Tax Relief

If your employer has required you to work from home due to the pandemic, apply for tax relief. The relief is worth between £1.20 to £2.70 a week depending on your tax rate. This government website explains how it works and how to apply.

Increase Your Investing

If you've done Money Milestones 1-6, then ramp up how much you invest for the long term either via your pension and an ISA. This blog from Which? explains the what, why and how of investing via index funds.

Start a Conversation

Have an open and honest conversation with your spouse or partner about your values, priorities and desired lifestyle and the role of money. This blog and this blog might give you some pointers.

Address Addictions

If you or your partner have an addiction, which is negatively affecting your financial wellbeing, check out these free resources from Genius Recovery.

Get help

If your financial situation is getting you down speak to The Samaritans or Mind. For personal financial help, including problems with debt, contact your local Citizens Advice Bureau or StepChange. And if you are 50 or older you can get personal financial guidance from the government PensionWise service.

Charitable Choices

Make or increase charity account donations. One of the benefits of winning with money is that it enables you to be generous to others less fortunate than you. By contributing to a charity account regularly you build up a pool of money that you can then donate to good causes when you wish. Your cash donation will be increased by 25% tax relief, and you might also benefit from income and capital gains tax savings. I use the CAF Charity Account for all my planned giving.

Channel Your Inner Stoic

Remember to only focus on the things that you can control. Not the things you can’t.

If you'd like to ask me a money question, please email enquiries@jason-butler.com, and I'll respond as soon as I can.

And remember that it’s important to have some fun, enjoy the simple things in life and keep in touch with people we like and love.

I wish you and your family a healthy and happy New Year and look forward to sharing more money insights and knowledge in 2021.

Warm regards,

Jason

* Source: The Money Charity https://themoneycharity.org.uk/money-statistics/

** Source: Office for National Statistics https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/bulletins/quarterlysectoraccounts/julytoseptember2020

21 Ways To Win With Money In 2021