Fix Your Finances: Five New Years Resolutions

New Year is a time for looking forward. By all accounts, 2010 is going to be a difficult year for many people. More redundancies are on the way, credit is virtually impossible to come by, and consumers are continuing to tighten their belts.However, it is important to be pro-active where your finances are concerned. Rather than reacting to events, you can bolster your financial position with a few simple steps.These five easy measures will take very little time, but could ensure that you weather the financial storm and emerge from 2010 in a better position.

Shop Around for Accounts

Even though the Bank of England base rate has plummeted to record lows in recent months, the cost of borrowing has sky-rocketed. This is because banks are finding it more expensive to borrow from each other, which in turn pushes up the cost to consumers. Capital One, for example, have recently announced interest rate rises of 20 per cent in some cases. This can make a massive difference to your monthly repayments.

Spend a day shopping around for the best credit card and loan deals. If your credit score is in fairly good health you should still find it possible to make the switch. Sadly, the days of skipping between 0 per cent deals are probably over, at least for the time being. Make sure you are not taken in by introductory rates, only to find yourself on a huge fixed rate when the offer ends.Credit cards aren't the only thing you should be shopping around for. As interest rates have fallen, many savings accounts are now struggling to keep pace with inflation. Keep an eye out for savings accounts still paying a decent interest rate. It is still possible, for example, to get 4.5 per cent ISAs.

Reclaim What You Are Owed

Recent months have seen a spate of successful complaints against various financial services firms. Whether it is PPI, bank charges, unfair parking fines, or any other spurious charge, you should make sure that you reclaim what you are owed. Writing a few letters can save you thousands, and our guides will help you through the process.

Check Your Tax

There are thousands of people in the UK with incorrect tax codes, and most of them do not realise it. An incorrect code could result in you paying too much tax - and 2010 is certainly not the year for unnecessary expenditure. Furthermore, make sure that you stick to any HM Revenue and Customs deadlines. If you are a self assessment taxpayer, make absolutely sure that you get your form in on time, otherwise you will receive an automatic £100 fine.

Set Up a Cash Fund

Job security is at the forefront of most people's minds this year. Redundancy can obviously have a devastating financial impact, particularly as new jobs are so scarce. If at all possible you should set up an emergency cash fund, in an instant access bank account, to tide you over in the event of redundancy. In ideal circumstances the value of this fund should be equal to at least three months' living expenses.

Budget, Budget, Budget

Living within your means has suddenly become a vital necessity. New credit is very difficult to find, and it is expensive if you do. Draw up a budget that includes all of your income and all of your necessary expenditures. Making sure that you understand how much you have to play with will help to ensure you don't spend money that you don't have.2010 is not going to be a fun year from a financial perspective. However, if you can spend responsibly, cut down your borrowing, and sort out your tax affairs, there is no reason why this year should be particularly painful.

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