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A checklist for your finances in 2007
By Emma Lunn
January
If you're self-assessed for tax then you must file your tax return and pay any taxes you owe by 31 January to avoid penalties.
Draw up a proper monthly budget. With a better understanding of where your money goes you can see how much you can free up to save or pay off debts.
Focus on paying your Christmas credit card debt off. Get a 0% credit card that will allow you to pay off your debts without interest accruing.
February
Think about saving. If you haven't used this year's individual savings account allowance, opt for a cash ISA, as all interest will be paid tax-free.
An instant access account is often the simplest option. Obviously, rate is important, but so is consistency, unless you like switching accounts several times a year. Steer clear of accounts offering short-term bonuses and look for those with rate guarantees. Also be wary of accounts that pay high rates but don't pay a penny in any month you make a withdrawal.
Of course, it doesn't matter what your account pays unless you are regularly paying into it. The most effortless way of doing this is to work out how much you can afford to save each month. Then set up a standing order instructing your bank to transfer the money into your savings account as soon as you get paid, so your money is whipped out of your account before you've had a chance to spend it.
March
The final month of the tax year is all about tax and ensuring you've made the most of this year's ISA allowance.
Once you've set up your ISA, there will be no income tax to pay on your investments for the life of the plan and no capital gains to pay when you cash it in.
The rules surrounding ISAs have recently been simplified, so this year there's no excuse. The distinction between mini and maxi ISAs has gone - you can now invest a total of £7,000 in ISAs, with up to £3,000 in cash and the remainder in equities. You can also now transfer existing cash ISAs into equities.
March is also an ideal time to have a spring clean. But rather than throwing out all your junk, why not see if you can sell it on eBay.
April
The new tax year starts on 6 April so this is an ideal opportunity to take advantage of your new ISA allowance.
If the value of your home, savings and investments exceed £300,000, start thinking about inheritance tax. There are a number of ways you can minimise the IHT liability. Ensuring your will is IHT friendly is usually the first step. As transfers between spouses are tax-free, if married couples leave assets equal to the IHT allowance to their children rather than their spouse on the first death, it's possible to use both IHT allowances. This simple bit of estate planning can save 40% of the nil-rate band - for this tax year (2007/08) that means £120,000.
Another option is to give money away. For example, each year, you can give away £3,000 tax-free. Some wedding gifts are tax-free - as are those gifts you can prove come from income rather than capital. Gifts in excess of the prescribed limits become tax-free after seven years.
However, if you don't want to lose control of money you give away you can set up trusts for dependents. Whatever option appeals, discuss your plans with a specialist.
On a lighter note, if you're planning to get away over Easter or the other Bank Holidays coming up, buy an annual travel insurance policy.
May
Many current accounts pay derisory rates of interest, so shop around for a better deal. If you're usually in credit look for an account paying a high rate of interest on balances, or if you are more often in the red look for one charging a low rate on overdrafts.
June
Review your mortgage, if you haven't already. If you're paying the standard variable rate (SVR), and aren't tied in, it's foolish not to switch.
July
If you're off on holiday, think about how you'll pay for goods and services while you're away. Plastic is a convenient way of spending. However, there are big differences in the levies charged for foreign transactions, so make sure you've got the right card. With debit cards, for example, not only will you have to pay a foreign currency loading (typically 2.75%), you may also have to pay a fee for every transaction. With credit cards, you'll still pay a foreign loading fee when you pay with your card, and when you use the ATM you'll typically pay between 2% and 2.5%.
If you fill in a self-assessment tax form, it's deadline time again - 31 July is the day your second payment on account for 2006/7 is due.
August
The football season kicks off in August, so if you're planning to watch matches on Sky Sports, shop around for the best digital TV/phone/broadband package.
September
You may not feel like it, but if you want start 2008 without a financial hangover, now's the time to start saving for Christmas. This way, you won't be trying to fund Christmas on one month's salary alone.
September also sees new car registration plates hit the forecourts. Don't accept a finance offering from the car dealership; shop around for a personal loan instead. Also, make sure you have the lowest possible premium on your motor insurance by comparing quotes from different providers.
Before it gets too cold it's a good idea to check you are with the cheapest energy suppliers.
October
The autumnal weather provides a helpful reminder to review your home insurance. The past couple of years have seen extensive flooding in some areas and storm damage in others, so it's vital that you have adequate cover for your home.
Check that both your buildings and contents insurance are up to date and add on any new possessions.
Also consider getting insurance for your boiler or central heating system. Plans cost anything from £75 to £280 a year depending on your heating system and how much cover you want.
These can offer great value for money - especially if they include an annual service - but think twice if you have an old boiler. Many insurers won't replace models that are beyond economical repair or a certain age.
November
Now's the time to get the bulk of your Christmas shopping done. Leave it until the last minute and you'll end up panic-buying gifts and spending more than you planned.
Instead, head to the shops with a list and a realistic budget. If you can't face the crowds, shop online.
In your festive budgeting, remember it's not just gifts we splash out on - remember you'll spend more on food and entertaining too.
December
Hopefully, if you've managed to keep your finances on track all year, you'll have saved enough to pay for Christmas. However, if your plans have gone awry, and you do need to borrow, at least do it wisely.
The cheapest way is usually a 0% credit card - just make sure you have a plan to pay it back as soon as possible. An overdraft can often be a more convenient option to tide you through the festive period, but find out your charges first. If you think you're likely to need a bigger overdraft, speak to your bank first, as charges for going over your limit will only add to your financial headaches.
And with your boss in a festive mood, now is a good time to ask for a pay rise. Make a list of your achievements over the past year to justify your request for more cash - then make an appointment with your manager to discuss your salary.
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