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New Year Money Makeover |  | | Now that Christmas is over – for another year at least – it’s an ideal time to get organised for the beginning of a new year. And where better to start than with your money?
You may feel like you’re rushing around and don’t have time to spare, but it’s worth setting aside an hour or two if you can. It will help you to get your finances in the best shape for 2009. Your purse and your bank balance will thank you.
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1. Draw up a money plan for the year
Work out what you want to do with your money throughout the year and where you would like to be financially in 12 months’ time. Do you want to increase your savings so you feel more secure? Would you like to spend some money doing up your home? Do you want to pay less interest on your credit cards, loans or mortgage?
Write down two or three items on your money wish list and put them in order of priority.
2. Check your credit rating
Having a good credit rating generally means that you can borrow at the lowest rates, but in the current climate it’s more valuable than ever. There are three credit reference agencies, Experian, Equifax and Call Credit, which all keep credit information about how you’ve repaid loans and credit over the last 12 months. Serious debt problems, including defaults and county court judgements (called decrees in Scotland) stay on file for six years. You can get a copy of your file from all three agencies. |  |
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| 3. Correct any mistakes
If there are any mistakes on your credit file, get them corrected as quickly as you can. Tell the credit reference agency what you think is wrong and they’ll contact the lender on your behalf. They should mark this information as ‘disputed’ while you try and resolve it, which means a prospective lender is not allowed to rely on it.
4. Play your cards right
When it comes to credit cards make sure you get the right one for your circumstances. Go for a 0% balance transfer if you have existing debt, but check how much will be charged as a fee. A 0% offer on all your purchases can be useful and can give you some flexibility when spending – and don't forget that cards with loyalty schemes attached will reward you while you shop.
5. Check your savings rates
The past year has taught us that knowing our savings are safe can be more important than a market leading interest rate. You’re entrusting your money to the company that holds your savings account, so you have to feel confident that it will be around for years to come. Your savings are protected up to a limit of £50,000 (although some European banks may be covered by their home country’s scheme).
Banks are licensed by the regulator, the FSA, but some banks that are part of a larger group share one banking licence. If that’s the case, you’d only be protected for up to £50,000 savings throughout the group. While M&S Money is owned by HSBC, each has its own banking licence, so the £50,000 limit applies to each brand. |
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 | 6. Motivate yourself
If you’re aiming for financial fitness, you’ve got to put in some work, but it will be worth it! Look back at your money plan to remind yourself of what you want to do better this year and tick off your goals once you’ve accomplished them. Then you can relax in the knowledge that you’ve done a good job. |
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