The notion of spring cleaning is waning these days, however instinctively spring is a season of action. After hibernating, or being less forthcoming in winter, spring gives the sense of new opportunities. There are several reasons why the month of May is the best time to give your finances a proverbial “spring clean”, ensuring you are on track for the year ahead.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it.
Dusting off last year
Spring cleaning, at least in the UK, came from the days when fires were used inside the house for heating. As the weather warmed, houses could be opened up again for the first time in months, and fresh, clean air could populate the rooms again.
The rollover of the tax year therefore occurs in a poignant month to our seasons, allowing the “dusting off” of one year and simultaneously the fresh beginning of another.
Whilst our housing and heating situations have changed somewhat, the first quarter of the tax year, i.e. April, May and June, continue to be the best months to take a step back and reassess your finances from last year, whilst making plans for the next.
Start of the 17/18 tax year
April is sometimes too soon to fully assess your financial and tax position for the previous tax year. Most banks don’t send interest summaries until end of April, or early May and of course it takes some time to finalise your figures up to 5 April too.
If you are organised though, you can get your paperwork to your accountant within 4-8 weeks of the tax year-end.
This will give you accurate figures in which to work from whilst you carry out your financial planning for the year ahead.
Even draft figures, with a few educated estimates, should enable you to be objective in what changes you can make for the new tax year.
This will mean you can get ahead of the game and make the most out of all tax allowances and new opportunities.
The sooner you can action any changes to the way you currently operate your finances, the better. This is why the months in quarter one are best to take action – else you could miss out, or not reap the full reward come the end of the year.
Have your financial goals changed?
With the warmer weather, generally brings a renewed optimism as well as an inclination to generate new ideas.
Life changes frequently, but spring is a great time of year to re-align your personal and business goals.
- Are your key goals in your business and personal life the same as they were last year?
- Make a note of any that have changed
- Has your anticipated date for retirement changed?
- Are your investments sufficient to meet your long-term goals?
- What rate of return are you getting on your savings and investments?
- Can these be improved to make your money work harder for you?
- Has your attitude to risk changed in the past 12 months?
- Are you willing to dip your toe into a more risky investment, for the prospect of a bigger return?
The questions continue. The important thing is to take time out of your schedule to reassess your plan.
Working with your financial adviser helps to keep your thoughts productive and goal-focused.
Are you paying too much tax?
If you are the type of person that keeps track of your financial position month on month, then it is likely you will already have a good grasp of what your tax bill looks like at the end of the tax year.
On the other hand, if you are less organised, then it may come as a surprise.
If you are paying too much tax, by not maximising tax-saving opportunities, then knowing about it at the start of the new tax year, gives you time to mend the error of your ways and do better this year.
Leaving it until later in the year results in mistakes being made over and over, and you may find you never get to that all important position where you are paying the least tax possible.
Need help to spring clean your finances? Speak to Darren
Dental & Medical Financial Services have been helping doctors and dentists with financial planning for over 25 years. Call to discuss your options with Darren:
Tel: 01403 780 770
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