What will the new year bring for personal finance?

By David Field


With the new year fast approaching, it's time to start making preparations for the new year, and for many money-savvy people, it's an opportunity to start planning and budgeting for the financial year ahead. And while it's always useful to use a bit of foresight when it comes to money issues, the coming of 2007 is likely to bring significant changes worthy of a bit of extra planning.

The first major factor to consider is the likely state of the property market in the next few months, with house prices almost universally predicted to continue rising. While this might be good news for those who view their home as an investment, further price increases are also likely to further financially stretch those yet to get on the property ladder. The effect of the rises might also encourage the Bank of England to raise interest rates again, meaning that mortgage holders could find themselves with less disposable income as household bills increase.

The second major change that is likely in 2007 is the introduction of fees for customer bank accounts. According to many banking industry observers, the days of opening a current account for nothing are over, with banks needing to find more money due to limits being imposed on how much they can charge for overdrafts. If you're likely to run up an overdraft in the coming months, though, this could be good news for you.

According to money supermarket, 2007 could also see a significant overhaul in the car insurance sector as well, with more people likely to save money on so-called 'pay as you drive' schemes. Such schemes are already being introduced, but the new year is apparently likely to see them become more widespread, allowing drivers to pay for their insurance depending on how much they drive, rather than simply paying an annual premium.

But regardless of whether these issues are likely to influence your financial decisions for 2007, the new year is surely a great opportunity to check your personal finances and sort out where your money is coming from and going to.

According to Steve Gracey, a spokesperson for Alliance & Leicester, giving yourself a wealth check might not be the most exciting way to bring in the new year, but it might be one of the most useful.

"It's boring, yes, and no one wants to have a wealth check but the new year is always a good time to have a real honest look at how much you've got coming in and how much you have got going out and whether you can afford your lifestyle," he said.

"If you can't then you either need to tighten your belt or have a look at your debts and the best way of paying them off."