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Spend & Save

Simon Read: Stay alert to the changes in the offing if you want to keep your money on track


At the start of last year, I suggested to you that it was time to take more interest in your financial affairs if you want to end the year in a better position.

Did you take my advice? Did you improve your financial standing in 2013? I have to admit I did little to improve mine although I'm pleased to say I avoided getting into further debt.

But I'll assume that, like me, you're probably still struggling to cope with the complexity of your finances. Even if you're feeling relatively wealthy or sitting on a huge gain from last year's relative stock market boom, there are still a million money decisions to make as we move through 2014.

For starters, what should you do about the interest rate rises we're now expecting to hit this year? I'd suggest doing nothing more at the moment than checking whether you can get a better mortgage deal or find a higher-paying home for your savings.

Then as we get closer to the rate rise – whenever it comes – keep monitoring your savings and borrowings and be ready to switch or fix according to whatever gives you the best option.

What is clear to me is that if you want to keep on top of your finances, you need to keep on top of what's going on. So reacting to an interest rate rise is important.

Reacting doesn't mean actually having to switch accounts or move money around. But it does mean taking a look at what's available and what's changed since you chose your financial products and checking that the decision you took a few months or years ago still works.

For instance, I've always had a bugbear about dormant accounts. This is where banks or building societies launch market-leading savings accounts and then – once they've suckered people in – they effectively give up on them.

They then let the rate paid languish to less than 1 per cent. In fact on many accounts the interest rate has fallen to an insulting 0.1 per cent.

If you don't check the rates regularly you won't necessarily know that you're getting paid practically nothing on your hard-earned savings. You should check them, if not regularly then certainly when there are changes in the air as there will be this year.

As we move through the year and approach the general election in 2015, expect more tax giveaways from the current Coalition government. They probably won't announce much in this year's Budget on 19 March, but by the Autumn Statement there should be a host of potential vote-winning measures announced.

But if you don't act upon them, you may lose out. Take the annual individual savings account allowance that we all have. It allows us to stash £11,520 in an account where all the gains are free of tax. Up to £5,760 of the allowance can be saved in a cash ISA, which is simply a deposit account.

If you have savings and you haven't put them in an ISA, you will be losing out on that tax benefit. You have until 5 April this year to use the current 2013-14 ISA allowance and then, from 6 April, you have a further allowance of £11,880 that can be used.

There are lots of other tax actions that you should be considering before the end of the financial year, and there are likely to be more to think about as the year progresses and next year's election starts to occupy the minds of our politicians.

If you have investments, the 2015 election could have a major impact on you this year. Will the rising stock market continue upward? Some say it's only a question of when the Footsie climbs past the 7,000 level for the first time, and not a question of if.

But that doesn't mean that your existing portfolio will still work for you. What about the impact of the Scottish referendum on independence in September? Keeping an eye on your investments in our changing world is crucial to ensure your nest egg is growing as quickly as you expect.

Finally, if you want a totally left-field piece of advice, here's my contribution to The Independent's 2014 share tips published a couple of days ago.

I like to invest in things I understand, so I tipped 5-a-side football firm Goals. Why? I play football at my local Goals centre every week. The share price climbed from 125p to around 175p last year and I reckon there could be more growth in it, especially if I persuade more people to play. Fancy a game?


Twitter: @simonnread