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Forget the Gym – it's time to get financially fitter

publication date: Feb 5, 2019
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author/source: Holly Mackay

Holly Mackay familyEvery New Year we struggle to eat healthier, drink less and get more exercise to get in better shape. But what if there’s a way to make a lasting change this year without giving up gluten and doing squats every morning? Why not try focusing on your financial fitness instead.4.

Holly Mackay, mum and CEO of independent financial advice website BoringMoney.co.uk, shares her top tips on what to prioritise when time is short, (especially when career breaks, juggling family commitments, smaller pensions and glass ceilings can mean that women finish their working lives with less in savings than the guys). 

Here’s some hints and tips to work on your wallet’s "core strength". You can also take this quick quiz to help you develop a more personalised Financial Fitness Plan:

1. Spring clean - clear your debts

A good "warm up" to financial fitness, this should be your number one money priority, as debts can pile up and cause problems. If you have credit card debt, consider transferring it to a zero-balance account – search online for deals and choose the option that suits your situation. And if you have payday loans, pay those off first as the annual interest can be over 1000 per cent.

2. Plan ahead for your kids with a Junior ISA

These tax-free savings accounts allow you to build up a nest egg for the kids. Anyone can pay into this until your child’s 18th birthday so they make fuss-free alternatives at Christmas and birthdays. Junior ISAs provide a fun way of getting the kids involved and teaching them about the stock market. It also means less worry for you about the future, giving them a head start with uni fees or driving lessons when they turn 18.

3. Improve your flexibility - keep three months' income in cash

Having enough money to cover unexpected costs like a broken boiler, as well as a buffer for time away from work is a great start to getting financially fitter. An easy-access Cash ISA is a safe bet for where to save the money, but if you can find a better interest rate on a current account and can afford the minimum monthly contributions, then keep it simple.

4. Prepare for the worst with life insurance

Life insurance isn’t just about protection in case of death, it can cover your mortgage payments in times of critical illness, if you can’t work. Hopefully you’ll never need it, but it’s better to be safe than sorry. Surprisingly, you can protect your family’s future by covering yourself with life insurance from as little as £10 a month if you’re healthy. Compare basic quotes online in under ten minutes. 

5. Bulk your savings with the stock market

You don’t need a pinstripe suit or a PhD to get your money fighting fit. New services called robo advisers do all the hard work for you – and nine times out of ten, stocks perform better than cash over a ten-year period. Compare them with Boring Money’s Best Buys table, using the "Stocks and Shares ISA" filter. You can invest up to £20,000 a year without paying tax.

6. Start saving for your pension now

Retirement might seem a long way off at the moment, but the state pension isn’t enough to live comfortably, so you need to save for it now while you have the income. The handy retirement calculator from Money Advice Service helps work out how much you’ll need to live on, and how much you need to put away each month to make it a reality. Then use our private pensions guide to figure out which products and providers are best for your future plans.