Getting your finances in order

 

Getting your finances in order is the only way to make it through these tough economic times. Debt, out of control spending and a frivolous attitude to money led us into recession and therefore we need to turn these on their heads in order to get back on track.

 

The Government is trying to deal with a massive budget deficit, which was previously under estimated by Labour, but the massive national deficit is nothing when compared to personal debt.

 

According to Credit Action, total UK personal debt at the end of April stood at a shocking £1,460 billion. This was a twelve-month growth of 0.8% and it means that individuals own more than what the whole country producers in a year.

 

This means that repayments on personal debt were £67.9 billion in the last 12 months. So, the average interest owed by each household is £2,695 each year and according to PWC, the average household will have to spend 15% of net income just on servicing the interest.

 

Scarily, the average British citizen only saves 6.25% of their average monthly take-home salary, which equates to £81.94. This is the lowest level it has been since summer 2007.

 

Don’t let yourself fall into this bracket. Although interest rates are low, and inflation is still high at 3.4%, you can still find savings account that will give you a healthy return on investment and cushion you against the unknown.

 

One of the best ways to save right now is in a cash ISA. The limit went up this tax year, so we can now invest up to £5,100 in a cash ISA. All the money you make in interest is not liable to any tax, so it goes straight into your pocket. Another advantage is flexibility. You don’t have to just deposit a lump sum and leave it. As long as you don’t withdraw or deposit over the £5,100 limit in any tax year you can take money out and put more in when you need to.

 

Another option is a bond. These should be viewed as long-term investments as you have to lock away your money for at least a year, and to get the best rates two-five year bonds are much more profitable. You also need to invest as much as you can. To get the higher rates, such as 3.5%, you need to invest at least £10,000.

 

Santander offer a full range of savings options including ISAs and bonds.