Updated: 19/04/2024
BUDGETING | SAVINGS | ISAS | GOVERNMENT UPDATES | CONTACT AKEPB
What is a budget? Use AKEPB’s template to get started
A budget provides a breakdown of your income and expenditure. It helps you keep track of your money while also planning for the future. Creating a budget is a key step in taking control of your finances.
Here are some tips:
• Identify your fixed or essential expenses (e.g. rent and bills), as well as your variable expenses (e.g. groceries and eating out).
• Convert your income and expenses into monthly amounts. Our template has a calculator which helps you do this.
• If you have money left over, you can allocate this towards your savings.
Click here to access the free budgeting template by AKEPB.
SAVINGS
Top Tips for Saving
Building good saving habits is a key part of achieving long-term financial security. Here are some tips to get you started…
• Start now and take advantage of compound interest. Compound interest is when your interest starts working for you and increasing your returns. The earlier you start saving, the stronger the effect of compounding on your money. Click here for a short video explanation.
• Consistency is key. Build the discipline to set aside savings on a regular basis. Try treating saving like any other fixed expense, such as rent or utilities, and see whether you can prioritise saving before you spend.
• Create a budget and reduce unnecessary expenses. To save effectively, you need to understand where your money goes and assess your needs and wants. Create a budget to track your income and expenses. Click here to get started with our budgeting template.
• Easy accessibility for emergencies. When building your savings, diversify the sort of savings accounts or investments you choose to be able to access your funds during an emergency. Scroll down for our post on different types of savings accounts.
Boost your savings with high interest
With interest rates at 5.25%, now is the time to shop around for a savings account with a competitive interest rate. There are three main types of savings accounts to consider:
• Easy-access accounts offer flexible deposits and withdrawals, giving you control over your money. These accounts are ideal for short-term savings goals or if you’re not sure about your future plans.
• Fixed-term accounts lock your funds away for a set period of time at a higher interest rate. However, early withdrawal may incur a penalty, so this account is only suitable for long-term savings goals.
• Cash ISAs are a tax-efficient way to save money, as interest earned is not subject to Personal Savings Allowance (PSA). PSA is currently £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers. Cash ISAs can be easy-access or fixed-term.
Before choosing a savings account, compare interest rates, minimum deposit requirements and penalties for early withdrawal. Always consider your individual needs and goals when making a decision.
What is an ISA?
An ISA is a special type of savings account that allows your money to grow tax-free. This means any interest you earn or capital gains you make (dividends or profits from selling investments held within the ISA) are not taxed by the government. Maximise your ISA allowance for this tax year before the 5 April 2024 deadline.
For more information on what ISAs are, the different types available, and how you can benefit from them click here for AKEPB’s guide.
GOVERNMENT UPDATES
Spring Budget - 06 March 2024
The Spring Budget outlines the UK government's plans for spending and taxation for the year ahead. Most changes take place from 6 April 2024. Here’s what it means if you are…
• Employed: Class 1 employee National Insurance will be cut from 10% to 8%.
• Self-employed: Class 4 National Insurance will be cut from 8% to 6%.
• Households with children: the threshold for the High Income Child Benefit Charge is rising from £50,000 to £60,000, with a tapered clawback between £60,000 and £80,000. The income threshold is determined based on the highest earner.
• Business owners: the VAT registration threshold will increase from £85,000 to £90,000 on 1 April 2024.
Changes to capital gains tax (CGT)
CGT is a tax on the profit when you sell an asset that has increased in value. Here are changes to CGT from 6 April 2024:
• The annual exemption for CGT is decreasing from £6K to £3K.
• The higher rate of CGT on residential properties will be cut from 28% to 24%.
For more information about CGT click here for the UK government’s guide.
Contact AKEPB
For more information on personal finance, contact AKEPB at [email protected]
