How to sort out your finances (now the kids are finally back at school)

It’s time to take a holistic view of your money – and figure out your priorities

It’s been a long six weeks. Very long. Millions of children are finally back at school this week – and Britain’s family finances are in a bad way.
But with the endless outgoings of summer behind you, it is time to take a holistic view of your finances and figure out your priorities. 
The autumn months are an ideal time to be frugal and financially intelligent, between the twin spending peaks of summer and Christmas.
Here, Telegraph Money delves into how to sort your finances out, whether it be boosting your savings and pension or managing children’s accounts. This guide will cover:
Dig out the financial records you hold, including savings balances, Isas, insurance plans, pension statements, receipts, income payments and anything else relevant to tax returns.
Next, borrowings: mortgages, credit cards, student loans, hire purchase agreements. The lot. 
Having taken everything into account, work out how much spare cash you have, over and above money needed to take care of emergencies and bills. 
If you have debts, use it to repay them, starting with those being charged the highest interest rates.
One of the first things to ask yourself is whether you’ve become overstretched. Take a good look at your bank statements and find outgoings you can cut straight away, such as multiple streaming subscriptions to keep the kids entertained on the holidays.
Add up the spending you’re in denial about that could easily be cut down. For example, one daily coffee adds up to hundreds of pounds over the year.
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You may not have had the flexibility to squirrel away money in the midst of a non-stop summer, but now is the time to get your cash growing again.
Millions of savers have vast sums of money languishing in low-interest accounts. That money is screaming out to be better utilised and put into higher-reward accounts.
There are some easy-access accounts (where you can make as many withdrawals as you like) which come with steady returns, but for the highest payouts a fixed savings account is the best option.
Research by comparison site Finder shows that the average person with an easy-access savings account keeps £7,734 in one.
With the average account today paying 3.07pc, a sum of £7,734 would earn £240.80 in interest over the course of one year if it is untouched.
Put that money in the leading one-year fixed bond (5.05pc) and the account would earn £399.74.
While rates above 5pc are almost completely off the table, if you act quickly you can still nab a good deal before they continue to trickle downwards.
The average one-year fixed savings account dipped by 0.2pc in August, and the expectation is that September, and subsequent months, will follow a similar trend.
For those wary of locking themselves into long-term fixes, there has been a rise in the number of people opting for three and six-month fixes.
Sarah Coles, of Hargreaves Lansdown, said: “The best rates are on short-term fixes for less than a year, and this is where we’re seeing clients congregate.
“More than half of them have taken the opportunity to capitalise on the certainty of a fix, without tying their savings up for a significant period.”
The leading six-month bond is Atom Bank’s 5pc, where a £10,000 deposit earns £252.62. The top three-month account from Oxbury Bank also offers 5pc, where the same deposit would grow by £125.52.
Use our calculator to see how much your savings account is earning you – and how much more interest you could get if you switched.
If you can, make sure to use your full £20,000 Isa allowance before the April 5 deadline. All interest earned in an Isa is tax-free – making them very appealing for savers who are likely to breach their personal savings allowance (£1,000 a year for basic rate taxpayers and just £500 for higher rate taxpayers).
The current leading one-year fixed Isa, from Virgin Money, offers a rate of 4.75pc. Put £20,000 in the account and you’ll take home £950 in interest next year.
On top of your own allowance, you have a £9,000 allowance to put into a Junior Isa for a child.
You’ll be putting money into the Isa, which they can then withdraw when they reach 18 years of age. All interest earned over multiple years will be tax-free, so the returns can be significant.
There are two types of Junior Isa available: cash, which will earn interest like a normal savings account, and stocks and shares, which allows you to invest the money.
Paying in £9,000 (the maximum) into a stocks and shares Junior Isa each year for 18 years means your child could, assuming a 3pc average return, end up with £217,510 when they become an adult.
Unlike pensions (where money is locked away until at least your 55th birthday), Isas can be easily accessed if you suddenly need cash.
Are you one of the 475,000 households with a mortgage deal expiring before the end of the year? 
If so, start looking for a new one now. Most lenders allow you to lock in a new rate well in advance, and switch if a lower rate becomes available before it’s due to kick in.
With the Bank of England expected to lower central interest rates from 5pc before the end of the year, those renewing their mortgage could find cheaper deals appear in the coming months.
It’s good to consider whether you want to opt for a fixed rate or a variable “tracker” rate, which for the first time in three years, are beginning to look more appealing.
Borrowers who fail to remortgage or move on to a new deal with their lender are automatically put on to their lender’s “standard variable rate” (SVR) when their term comes to an end.
The average SVR currently stands at 7.99pc, according to analysts Moneyfacts. This is far higher than the average two-year fix, 5.56pc, and the average five-year fix of 5.2pc.
If you have spare cash each month, it could be wise to overpay on your home loan.
This can reduce the interest being clawed back by your lender and speed up the process of becoming mortgage-free.
Even small overpayments can make a dent in lowering your interest bill. Use our calculator to see if paying extra on your mortgage is the best option for you. In some cases it makes more sense to put the money you would have spent on overpayments into a savings account.
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It’s easy to neglect your pension. Looking after children and paying endless utility bills and day-to-day expenses means your post-retirement plan takes a back seat.
But failing to get your head around your pension will come back to haunt you in future decades.
After taking into consideration all your finances, see if you can commit to putting more of your salary into your pension pot.
Increasing your contributions by just 1pc will be beneficial in the long run. 
If, for example, your annual income is £52,000, you are a higher-rate taxpayer and pay 40pc income tax on earnings over £50,270. You can, however, sacrifice some of your salary in exchange for topping up your pension which in turn will bring you back down to being a basic rate taxpayer. This not only boosts your pension, but lowers your overall tax bill.
If you have had multiple jobs over your career, you’ll likely have accumulated many pension pots. If you’ve lost paperwork for any of these, you can use the free government pension tracing service to help track them down.
It can make sense to consolidate these pots into one easy to manage, and potentially more cost-effective modern plan. 
Make sure to speak with your employer’s finance team and pension provider if you want to transfer some or all of your pensions.
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Thousands of eligible families are failing to claim thousands of pounds in child benefit, so make sure you aren’t one of them.
Under the scheme, a parent receives £25.60 a week for a first or only child, and £16.95 a week per additional child.
This is usually received every four weeks on a Monday or Tuesday, so each payment will be £102.40 for a first child and £67.80 per additional child.
Just be aware that if you or a partner who lives with you earns more than £60,000, you will have to pay the “high income child benefit charge”. 
You have to repay 1pc of your child benefit for every £200 you earn over £60,000. If you earn over £80,000, you’ll have to repay everything you receive.
You can, however, claim for the benefit and opt out of receiving the payment. This may seem like a pointless exercise, but far from it, as you will receive National Insurance Credits.
These can replace the National Insurance Contributions you might miss out on if you take time out of work for childcare, or have an income lower than £123 a week.
Having gaps in your National Insurance record, or not enough qualifying years, means you could get less state pension when you retire. You need 10 years to get anything and 35 for the full amount.