Investment - Articles - How to get your finances fighting fit for 2025


Standard Life shares tips to help set you up for financial success in the new year, as only 28% say they are living comfortably

 Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group, comments: “As 2025 begins, persistent cost-of-living pressures continue to challenge many across the UK, but the start of a new year is an excellent opportunity to regain control of your finances and set achievable goals. While financial concerns can feel overwhelming, taking small, actionable steps to review and plan your finances can help ease anxiety and set you on a path toward greater confidence.

 “Our latest Retirement Voice research shows that after a tough couple of years in 2022 and 2023 financial wellbeing is improving slightly, but challenges remain. Just less than half (48%) feel positive about their financial situation, compared to 41% in 2023 – however, only 28% say they are living ‘comfortably’ and over two-thirds of people are worried about energy costs (69%) and inflation (66%). To help you take control, we recommend a three-step approach: first, tackle any debt to keep it manageable, second, create or revisit a household budget to navigate everyday expenses, and finally, consider saving or investing for both short- and long-term goals wherever possible.”

 Mike Ambery’s Tips for Financial Success in 2025

 1. Get support with debt
 “If you’re concerned about debt, resources like MoneyHelper can offer free and practical advice. It’s a great starting point to identify which debts to tackle first, explore repayment options, and connect with professional advisors.”
 2. Review your household budget
 “Creating a realistic budget can help you prioritise essential spending and spot areas to save. With relatively high interest rates and stubborn inflationary pressure, particularly around energy costs, still impacting many households regularly reviewing your budget ensures it’s still working for you. Budgeting apps can analyse your spending habits and help you find savings by categorising expenses.”
 3. Set savings goals
 “If your budget allows, aim to set clear savings goals. Start by building an emergency fund to cover unexpected costs like car repairs or appliance breakdowns. Once you’ve built up this buffer, consider longer-term savings options. With best buy savings account interest rates still outperforming inflation, it’s a good time to explore fixed-rate accounts or tax-efficient options like cash ISAs. For those in a position to invest, the potential for long-term growth in stocks and shares remains appealing. However, always compare fees and charges and align your investments with your goals and risk tolerance.”
 4. Use Your Tax Allowances Effectively
 “Maximising your tax allowances each year can be an effective way to make your money work as hard as possible. The government offers various tax benefits on savings and investments, including annual allowances for pensions and ISAs. For example, when contributing to a pension, the government provides tax relief that can significantly boost your savings. A basic-rate taxpayer will see a £100 pension contribution cost just £80, while higher-rate taxpayers can claim a higher rate of tax relief. If you’re a higher rate taxpayer, some pension schemes will automatically apply your higher rate of relief, whereas others require you to fill in a self-assessment tax return, depending on how the scheme is set up. It’s worth checking this with your employer or pension provider. By taking full advantage of these allowances before the end of the tax year in April, you can reduce your tax burden and take home more of your cash.”
 5. Plan for your retirement
 “Pensions offer unique benefits, including tax relief and employer contributions that can help you reach your retirement goals. If you have a workplace pension, check if your employer will match contributions above the minimum – many do, which can significantly boost your savings. For those considering opening a new personal pension plan or consolidating multiple pots, review the charges carefully. A well-structured pension plan can help you achieve the future you want, but transferring pensions isn’t always the best choice. Seek professional advice to ensure you retain any valuable guarantees. It’s important to consider how much you’ll need to live on in retirement and how to get the most from your pension money. You might find the Pensions and Lifetime Savings Association (PLSA’s) Retirement Living Standards a good place to start to determine your income needs. Have a think about your ‘withdrawal strategy’ – how you plan to take your money – in a way that minimises your tax liability and ensures your pension savings will last as long as you need them to. This can be a complex task to approach alone. If you can, speak to a professional financial adviser who will be able to tailor their recommendations to suit your individual circumstance. If you’re unable to speak to an adviser, the government’s Pension Wise service offers free guidance.”
 6. Track down your old pensions
 “With job changes becoming more common, many people lose track of their pensions. Standard Life’s pension tracing tool could help you find them and, when found, consolidating your pensions may simplify your retirement planning by reducing fees and paperwork. Always weigh the pros and cons before transferring.”
 7. Harness online tools for planning
 “Online tools and calculators can help you see if you’re on track for the retirement lifestyle you envision. For instance, pension calculators estimate your future savings based on your current contributions, giving you a clearer picture of what you might need to adjust. Our Retirement Voice research highlights the importance of planning. Among those who have done significant financial planning, 68% feel positive about their financial situation, compared to just 30% of those who haven’t planned at all.”
   

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