A back to school moment for your finances

This article is the latest part of the FT’s Financial Education and Inclusion Campaign

The start of the academic year has always been a moment for me to set aside some time for financial planning—and with winter approaching, maybe you should too.

In the past, this process was positively colored with the scent of fresh exercise books. As you approach halfway through the tax year, it’s a good time to review the investment performance of your Isa and your annuities, adjust your budget, and check that your savings goals are on track.

This year, however, you may feel a sense of foreboding. There is more political and financial uncertainty than usual and we are grappling with rising inflation, rising bills and volatile markets.

Today, more than ever, colleagues from the FT editorial team come to my desk to ask questions about their personal finances. The three most common themes? Utility bills, mortgage interest and retirement worries.

As suppliers start increasing monthly direct debits, submitting regular meter readings is a must, as is understanding your household’s electricity use and what you can do to manage it.

FT FLIC

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People who live in historic properties will be in for a shock as their homes are probably the most energy inefficient. However, higher prices shorten the “payback” of the investment for installing solar panels (message me if you consider it).

My stepdaughter’s Christmas present from us is a double feat of forward planning: “smart” radiator valves are installed in her home, compatible with her Hive app.

Soaring utility bills could add hundreds to your monthly expenses, but so can rising interest rates if you apply for a debt restructuring.

Best advice for planning ahead? Know the date your current fix expires and look out for a new offer six months in advance (it is possible to ‘lock in’ an interest rate in advance).

If you’re thinking of paying to break your current solution and grab a new one, I’ve had good feedback from readers about the free calculator in the Nous.co app I mentioned recently, which helps compare costs close.

All of these things will of course place a much greater burden on our budgets in the future.

The record credit card debt numbers we’re seeing show how many people are already using debt to fill gaps in their budgets. For some, the solution might be to reduce what you regularly put aside in savings and investments.

This decision should never be taken lightly, especially if you’re considering cutting your pension contributions because you’ll lose employer top-ups and tax breaks.

One exercise you may find helpful is cash flow forecasting – a tool popular with financial planners. For the coming months, factor in the likely increases in your cost of living and major expenses (like Christmas and that January tax bill) and then see how your budget might absorb that shock.

Finally, many will worry about the long-term impact on their investment goals.

Charlotte Ransom, founder of Netwealth, says the most important question her clients ask is: will I have enough to retire?

“People want to understand the impact of rising inflation, higher spending and currently low investment returns on their likely retirement pot,” she says. In addition to longer employment, many are considering how far they can afford to help grown-up children with gifts of money.

At a time when there are so many questions about our finances, I’ll be asking a few more this Saturday at the FT Weekend Festival to help FT Flic, the Financial Literacy and Inclusion Campaign.

We all need to get our finances under control, and promoting financial literacy is a goal we can all stand behind.

Martin Wolf, our senior economics commentator, will be among those taking part in a personal finance quiz (if you’re feeling well, you can bid for lunch with one of us at the Flic charity auction).

If you can’t make it to the festival at Kenwood House Gardens in north London on Saturday, fear not. I created this mini quiz for the readers at home and have two awards from the FT archive to inspire you in your budgeting efforts.

The Financial Times eggcup was (we think) a gift for subscribers in the 1980s. His pinstriped arms hold a March 1988 issue of the FT with former Chancellor Nigel Lawson’s budget speech on the front page.

One of the most controversial in history, Lawson announced huge tax cuts (sound familiar?) that ultimately preceded a huge spiral of inflation – something to think about when you crack open your breakfast egg!

For a chance to win, please answer the following questions and the tie breaker.

I’ll reveal the answers (and winners) in my next FT Money column on Saturday September 24th. Yes, dear readers, despite my penchant for planning ahead, I’m about to take the worst vacation in history. But when I come back, we’ll have a new prime minister, plus new energy aid measures, and possibly some tax policies to chew through together.

Claer Barrett is the Consumer Editor of the FT: [email protected]; Twitter @Clearb; Instagram @Clearb