Manage your finances in the new financial year

The new financial year is under way and now is the time to start planning your money for the year ahead. It's an important life skill and successfully budgeting, no matter how big or small your income, will pay dividends and save you a lot of headaches.

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Here are some tips on coping with your cash this year:

Any financial plan should start with managing your debt. This year you should prioritise getting those debts clear and if possible avoid getting any new credit cards, store cards or loans. If you do have a credit card pay it promptly and stay within your limit. Any late payment will damage your credit file and cause you problems later.

It's crucial to clear any debts you have before saving. The interest you will be charged on your debt will far outweigh the interest you are paid on any savings. So, if you do have debts with high interest, concentrate on clearing them first.

Plan a budget and stick to it. Make lists, especially when you are off to the supermarket. Try and stick to the list whenever possible. If you are faced with paying for a bill in full or spreading the cost, pay outright. The chances are that the long-term repayment option will charge you interest.

When you are free of debt you can start to save. Having a nest egg will serve you well as you never know when you are going to have an emergency. For this type of saving you need to get the best interest you can from an easy access account. It's worth looking at the comparison websites or Sunday paper money sections.

If you are in a stable financial situation you may want to take slightly more risk with your money. There are plenty of ISAs out there but many of these will only offer you modest rates of interest, albeit tax free.

To make more money you need to look for unit trusts, investment trusts and shares. Remember, you should only invest in these types of products if you are prepared to leave the money for a while. You may want to try a bond if you can afford to leave your money for three or even five years. It is important not to get carried away by high returns, make sure you do your research before parting with your cash.