2011 and counting...

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When money is not as plentiful as we would like and when the cost of living seems to keep rising, it's important to make some New Year's resolutions that will help to improve your financial situation. Wanstead based Independent Financial Adviser, Patrick McClelland, offers advice on controlling your finances in 2011

As a starting point, the first thing to do is to take a reality check and then get smarter about your investments, retirement plans and your home. Here are three resolutions to start you on the right track.

Resolution One: "I will accurately assess my financial situation"
Examine your bank statements for the past 12 months. What do they say about you and your spending habits? Take the time to make an honest assessment of where you are. What does your credit card debt situation look like? Have you been making sufficient contributions to your medium to long term savings? If you don't really know or acknowledge where you are, you are counting on luck to make a better financial future, and that doesn't work.

Resolution Two: "I will set realistic targets"
After appraising your finances, set realistic goals. If you have debt, look to clear those credit cards with the highest interest as a priority. This comes with the caveat that you also have sufficient sums to cover any financial emergencies, as you shouldn't count on being able to re-borrow what you've paid back.

If you have a portfolio of investments, ask whether they are doing what you expected them to do when they were first started. More importantly, what do you expect or want from them today.

If you want a comfortable retirement to be feasible or to pay your mortgage off early, look to set aside an extra payment each month. Its better to start with an amount which is comfortable and can always be increased rather than starting with an ambitious figure which you then have to reduce or end up stopping.

Resolution Three: "I will take control of my finances rather than it controlling me"
If, like many people, you have collected an array of different plans and policies over time, it's easy to get bogged down by all the paperwork that you constantly receive. One way forward is to look to consolidate as much as possible, especially if this can be done on a cost effective basis. Not only will this provide greater clarity, it will also enable you to develop a coherent investment strategy. Use your review to not only assess how you can build for your future, but to also protect it. If you are the main breadwinner ask yourself what would happen if you could not work due to an accident or illness, and then make sure that you have adequate cover in place.

Don't be afraid to turn to someone you can trust to ask for their help. If no one springs to mind or you prefer to keep your finances more private, consider taking professional advice. Talking to an Independent Financial Adviser can help you by looking at your financial situation in an objective way, enabling you to plan for the future whilst ensuring you have savings for the short, medium and long term.

As Martin Luther King once said "You don't have to see the whole staircase, just take the first step." And maybe that's the trick, decide to make a start and then go from there.


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