FOOL'S EYE VIEW
Your Two-Minute Financial Health Check

By Alison Hunt (TMFAlly)
August 30, 2005

Do you ever feel that there simply aren't enough hours in the day for you to do all the things you wanted? And of the precious time you have left, the last thing you would want to do is organise your finances? Indeed, a recent report from financial systems firm Docucorp has found that six out of ten of us regularly ignore any financial correspondence we receive with three out of four people saying they would rather read anything than pensions and insurance information!

Well, you'll be pleased to know that keeping on top of your finances really doesn't have to be such a chore. Once you've got them organised they really take minimal work and you'll most probably take great pride in your effort to boot. To make it easy for you, here's a two-minute checklist of how to get a better deal for some of the things that most of us have, should have in place or should consider. It will really only take two minutes to read, but if you make an effort to tackle each one in turn, you will find you've sorted out most of your finances and will know you're getting the best deal for each. And who doesn't like saving money?

So go on, give it a go and spend two minutes going over your finances.

1. Tax-Free Investing And Saving

Have you used your ISA allowance yet? Everyone over 18 can invest up to £4,000 each year in a mini-shares ISA, or up to £7,000 in a maxi-shares ISA tax-free. Don't invest anything you can't afford to tie up for at least five years (or even ten) to minimise any potential losses you could make from selling early. In fact, many people use their ISA allowance to save for retirement.

And if you choose the mini-shares ISA route, you can also save up to £3,000 as cash, tax-free in 2005. All taxpayers should consider using their mini-cash ISA allowance if they don't intend to invest more than £4,000 this year, as it's one of the few ways we can save our cash without having to pay tax on our interest!

Learn more about ISAs in our ISA Centre.

2. Borrow For Less

Don't pay over the odds if you need to borrow money. Borrowing £5,000 at a market leading loan rate of 5.6%APR would mean monthly repayments of £221, over two years. The same amount borrowed on the high street at 11.9% APR, however, would mean you'd have to fork out a further £14 each month, or £346 in extra interest over the course of the loan! If you're paying a fortune to borrow, consider switching to a Best Buy personal loan - check out our Loans Centre for some great deals.

And if your credit card balance is accruing interest like there's no tomorrow, why not switch it to a 0% deal for balance transfers? You can currently get up to 12 months interest-free subject to a 2% balance transfer fee (maximum £50) but there are still plenty of cards offering 0% for up to nine months, with no fees. Switch your debt, cut up the card and pay off that balance as soon as possible!

You can now search and apply for a number of 0% cards in our Credit Card Centre.

3. Earn More From Savings

Are your savings earning as much interest as they could? With the recent base rate drop you'll need to make sure your account is still paying a decent interest rate and worryingly, recent research by SAGA found that 57% of us still keep our savings in a High Street bank account, despite the chronically low interest rates offered. Remember, a higher rate taxpayer with £3,000 in a savings account will earn £54 interest each year in an account paying 3%, but £90 in an account paying 5%. Find out your rate and if you need to switch, check out these best buy savings accounts.

Find a top savings account in our Savings Centre.

4. Move To A Better Bank

Are you still with the bank you signed up to at 18 (or younger)? A recent study by SAGA has found that 40% of those asked had been with their bank for over 15 years. Current accounts have changed over the last ten or so years, meaning that we don't have to put up with poor service, unfair charges and hideous overdraft fees anymore. And to sweeten the move, many accounts, from banks such as First Direct and Alliance & Leicester will give you a cash bonus too! So if you fancy a fee-free overdraft, free travel insurance, a high rate of interest or the ability to make free cash withdrawals abroad, check out this article. And consider moving bank account, today!

Earn more interest and grab a cash bonus too by switching current account in our Banking Centre.

5. Perk Up Your Pension

Retirement may seem like a million years away and not worth worrying about yet, but it's something we all should be considering. We're living for longer than ever, meaning that many of us will be facing a retirement of 30 years or more. Unless you fancy working until you're 90, you'd better start planning your retirement fund, now.

And the good thing is, when it comes to investing money, the longer you have, the better. Consider this: if the parents of a newborn baby were to start saving £100 each month into a stakeholder pension for the first 18 years of their child's life, and then stop, by the time that child turned 65 he or she could have a pension pot containing over one million pounds (assuming annual growth at 7% after charges). And although we're all now wishing our parents could have created our pension pot for us, the good news is we can all create large amounts of retirement savings for ourselves. The main thing to do is to start today!

If your company offers a pension scheme, consider joining (especially if it contributes on your behalf; that's free money). Then pay in as much as you can. A 35 year old earning £25,000, per year and contributing 5% of his salary each month (which his company matches) could have around £245,000 at 65 (assuming growth of 7% after charges). However, if he were to double his contribution to 10% (his company still only giving 5%) his pension pot could increase by £122,500 to over £367,500.

Of course, many of us would not be able to increase our pension contributions by a large amount in one go. But it is usually worth paying in as much each month as you can. Why not start by increasing your contribution by just one per cent, today. And then consider repeating the exercise in two month's time? You will get used to the slightly smaller salary but will appreciate the gains made by your retirement savings a whole lot more!

Find out more about saving for retirement in our Pension Centre.

6. Pay Less Tax

If paying tax is all you ever seem to do, why not check out our eight ways to hack back your tax bill; you may just find some tips to help reduce your tax payments. And remember to fill in your tax return as soon as possible if you wish the tax office to do your tax calculations for you. Remember, the deadline is just one month away (30 September 2005) or you'll have to work out the calculations yourself for submission before the end of January. And submit after this date and you'll be charged a late fee! You can apply for a login at the Inland Revenue website to fill in the forms online, if you don't have one already.

7. Slash Your Mortgage Bill

If you're a homeowner, one of the best ways to save money is to ensure you're getting the best deal for your mortgage and this means re-mortgaging whenever your introductory rate expires. After all, your house is likely to be the biggest debt you have so every 0.1% you can shave off that interest rate, the more money you can save. Just think, moving a £100,000, 25-year repayment mortgage from a Standard Variable rate of 6.5% to one at 5% would save you nearly £91, each month. There are also a lot of really great deals out there at the moment so if you're in a position to, you should really think about taking advantage of one. Why not check out 'Five Ways To Make Your Mortgage Go Away'?

And another point worth considering is the advantages of overpaying your mortgage. Any extra you can put into this debt will save you thousands in interest and mean you will pay it off earlier. And if you have a variable rate or tracker mortgage, you may find this article on how to benefit from rate cuts useful.

Find a better mortgage in our Mortgage Centre.

So there you have it, your two minutes are up! Start tackling each one of these items in turn and before you know it these finances will be in good shape, plus you'll know you've got the best deal for each. And then you can consider starting on all those other financial products you have!