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ADVICE: '10 tips for a 2012 money makeover'

FOR MANY people, the start of a new year is a time for reflection. It is an opportunity to dust off and resurrect old resolutions or create new goals.

Below, Linda Asafo-Agyei, Powerlist rising star and vice president of wealth management at Barclays Wealth, offers 10 tips to help you have that all important financial makeover in 2012.

Know your current financial position

“Know exactly what your income and expenses are,” says Asafo-Agyei. She advises: “Expenses should not ideally exceed your income.”
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Plan a monthly budget and review expenses

“Eliminate unnecessary expenses so you are not regularly over your budget. Payday or short-term loan providers charge very high rates to cover your expenses, so this is not an ideal way to fund any excesses on a monthly basis,” warns Asafo-Agyei.

The private banker says those in debt should consider consolidation for easier debt management. “(It is) also easy to know exactly what is going on if you have your debt in one place.”
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Review bank fees and charges

Asafo-Agyei advises: “Go through your bank statements  and have a look at all your regular purchases, debit and standing orders. Pay special attention to things to which you are subscribing, for example magazines, TV subscriptions. Find out if there are things you are subscribing to and not using, channels you never view, and phones you don’t use.”

She says if you pay £10 or more for subscriptions you do not use, cancel the subscription. You can “save yourself £120 per year, which can be put to good use,” she adds. Asafo-Agyei also warns against withdrawing cash from credit cards because these attract fees.
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Use customer rewards programmes

“Earn air miles when you fly with the airline of your choice or Nectar points, which you can use in future for purchase or holidays,” she says.
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Save more and spend less

Whether you want to pay school fees or for holiday trips, Asafo-Agyei recommends saving for them. This means ensuring you spend less so you can save more. She also advises having a “piggy bank for unplanned expenses.”
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Invest in tax efficient investments like cash ISAs

“Shop around for the best net returns on your investments not the gross returns,” Asafo-Agyei recommends.
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Give up something small each month

Giving up items such as your morning coffee at Starbucks or Costa Coffee can help boost your savings and keep costs down, Asafo-Agyei says.

She calculates that, for example, if one coffee drinker spends around £4 per day during the average work week for two cups of coffee that means “£20 has been spent on coffee per week, which is £80 per month on coffee alone.” For the year that could be as high as £960.

Pay cash for purchases, do not buy on credit
“In this manner you are using your own money,” Asafo-Agyei says. “…Do not spend money you do not have. Store cards will fall in this category. We do not need a new dress and new shoes for every outing. We don’t have to change or wear the latest trend for every season. Pick up classic, durable pieces that will last several seasons.”

She also encourages shopping around for credit cards with lower APR (Annual Percentage Rate) or zero APR for a limited period where possible. In addition, you should limit the number of credit cards you have and avoid buying the latest gadgets on credit.
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Plan for your retirement

Asafo-Agyei urges taking time to plan for your retirement in light of the current economic environment.

She recommends adding to your pension or provident fund at work or setting aside funds every month in a savings account.

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Prioritise debts

Asafo-Agyei stresses that it is important to prioritise debts and tackle repayment in “bite sizes” along the lines of, for example, mortgage, educational, household/day-to-day expenditure and retirement planning.