How to get your finances in shape – tips for 2021!

The start of a new year is usually when we look to make changes in our lives. The word ‘resolutions’ is brought up in many conversations and the old adage “New Year, New Me” is often thrown around. Typically speaking, this tends to be when we promise ourselves to eat healthier, drink less, exercise more, or even start a new hobby. However, one area which I do not think we consider anywhere near enough than we should do is getting our finances in shape. 

Now that we are a few weeks into 2021, and with the prospect of ‘Lockdown 3.0’ continuing on past Feb/March, I thought it might be useful to list a few helpful tips on how to keep in control of your finances and improve your financial health for the upcoming year.


Creating a budget is an easy way to ensure that you remain in control of your day-to-day finances. Either on a piece of paper or using Microsoft Excel, write down all your monthly direct debits and your main monthly outgoings (e.g. food, insurances, credit card debt, petrol etc.). These are your essential outgoings. Then, add on any monthly non-essential outgoings, so the items that you pay for each month which you enjoy but are not critical for you to live (i.e. Netflix, Sky Sports, Magazines etc.) as well as your ‘nice to have’ / discretionary spending that you would typically spend each month (e.g. takeaways, cinema, designer clothing, general entertainment). 

Add these all up and deduct the total from your net monthly income – the amount paid into your bank account after tax has been deducted – and this will tell you how much you have left over each month that can be saved, spent, or, where cuts might need to be made. This is a really simple but effective way to take back control.


It is always worth checking the types of protection you have in place and whether or not you have any protection ‘gaps’. 2020 proved to be a challenging year for many families and this has brought protection back into the spotlight. The first place to start would be to check that your mortgage policy sufficiently covers your outstanding mortgage liability. If there is a ‘gap’, don’t worry, there are ways in which you can resolve this. 

In light of Covid19, the protection industry has also seen an increase in demand for Income Protection. It might, therefore, also be worth considering ways to protect your income in the event that you were unable to work due to an illness or injury (Income Protection), or in the event of death (standalone life cover or Family Income Benefit cover).  


2020 saw one of the quickest and sharpest falls in the stockmarket, followed by one of the strongest subsequent rallies. Having your investments reviewed by a professional is a great way to ensure that your investment portfolio is in-line with your goals (i.e. what you would like your portfolio to ultimately be used for), your tax status and, importantly, your attitude to risk. Many do not realise this but investing directly in a few listed companies is actually quite high risk! In fact, you could be losing out on the added value that diversification can bring. Similarly, some providers still have complex charging structures in place, which will of course reduce the total return that your investments generate. 

On the other side of the coin, if you have surplus cash savings (i.e. that which exceeds your ‘rainy day’ fund), you may have noticed that the interest being paid on this is next to nothing. The negative impact that inflation can have on your cash savings should never be ignored. It might be worth, therefore, considering whether it would be suitable investing this and creating a long-term financial plan as a way to grow your wealth. 


Whilst it is great that employers now have a duty to set up a workplace pension plan for the bulk of their employees, one of the unintended consequences of Auto Enrolment is that many of us now have various ‘dormant’ workplace pension schemes that were set up by our previous employers. As many often change jobs in the New Year, now is as good a time as ever to consider your old workplace pensions.

Rather than leaving these where they are, it might be worth reviewing these to see if they are up to scratch. From experience, many individuals would prefer to ‘tidy up’ these plans and bring them together so that it is easier to keep on top of their retirement savings. If you cannot remember who your pension is with, Gov.UK has an area on their website that allows you to check which pension administrators are currently being used by employers to manage their pension schemes. Otherwise, you could always speak to your old HR department. A word of caution though, pensions are very complex arrangements and you could lose some valuable guarantees should you transfer away. Therefore, taking financial advice is recommended as it can give you peace of mind that you are making the right decision. 

Should you wish to seek financial advice to discuss any of these areas in more detail, please do not hesitate to get in touch. 

Cave & Sons Ltd is authorised and regulated by the Financial Conduct Authority (FCA), Financial Services Register number 143715.

This communication is for general information only and is not intended to be individual product/investment advice, tax or legal advice. The views expressed in this article are those of Cave & Sons and should not be considered as advice or a recommendation to buy, sell or hold a particular investment or product. You are recommended to seek professional regulated advice before taking any action.