With a new year and a new decade under way, and the economic gloom persisting, it is an appropriate time for us to consider our financial positions and for us to understand what we all need to do to determine our financial independence.

However, the road to financial independence is pitted with stumbling blocks and distractions that can divert us from our course.

Here are seven of the most disastrous financial planning perils that can befall us; call them the Seven Deadly Financial Planning Sins if you like.

1 – Apathy

“It’ll be alright in the end”, “I haven’t got time to look at my finances now, daily activities are more important”

It is easy to put your Financial Planning to the bottom of the list because the long term is so far away isn’t it?

Don’t! Do not put this Financial Planning stuff off.

Time passes quickly (the Millennium doesn’t seem like ten years ago does it?) and you may find you can’t afford to when you expect to.

2 – Hope

In life, hope is a good thing but it cannot be relied upon. Do not hope you have enough to be financially independent when you want to be.

Work out what financial independence means for you (what ‘your number’ is) and put a plan in place to attain it.

3 – Greed

This is perhaps the oldest but least heeded lesson in Financial Planning. Too many people get caught up in the fervour of a bull run only to see their hard fought gains lost during a market crash.

Don’t chase every last penny of profit; leave a bit for the next person and ensure you have enough cash to provide security in an emergency.

4 – Inattentiveness

Financial Plans are not a one off document that, once established, will see you through to the end. Personal circumstances change, investment markets and economies rise and fall, and legislation changes.

By not reviewing what you have established, you are hoping your Financial Plan will do its job when in fact it may be stalling or in fact in decline.

5 – Indebtedness

There is little point in devising a plan to have your assets work as hard a possible for you if you are increasing your bottom line costs through needless loans and credit card debt.

Run your finances as a business by keeping control on your costs and focussing on profit.

6 – Imprudence

“If it seems too good to be true it probably is.” This is another often quoted and often ignored piece of advice.

You cannot get rich quickly without taking significant risk and even then you should only risk what you can afford to lose.

Think carefully about how much risk you are willing to take with your money and understand the downsides.

7 – Hastiness

Do not rush into an investment or contract that you may not be able to reverse or may mean you lose access to your capital for too long.

Always consider what you are investing in, read the terms and conditions carefully and seek professional advice if you are not sure whether something is appropriate.

Andrew Neligan is a Chartered Financial Planner and CFP professional at Informed Choice. He was a winner at the FT New Breed Adviser Awards 2009. Andrew is a specialist in Financial Planning services for legal professionals.

During such tough economic times, it is understandable that so many people stick their heads in the sand when it comes to their money.

By considering a few simple personal finance resolutions, it is possible to transform your personal finances and get to the end of 2010 with a much healthier financial position.

Here are our eight top personal finance resolutions for 2010.

1 – Work out your budget

It continues to amaze me how many people simply don’t know how much money they spend each month (and where this money goes). Working out and sticking to a monthly budget is all about spending less than you earn. If you achieve this, month on month, you will be in a better financial position at the end of 2010 than you were at the start.

2 – Get out of the red

If you have short term debt (credit cards, store cards, overdrafts, etc) you will know that debt is a drag on your ability to meet other financial objectives. It’s also an emotional drag on your attitude towards money and personal finances. Make clearing your short-term debt a priority before starting to save for other financial plans.

3 – Make a plan

This action ties in closely with your monthly budgeting. When you are working out what you are going to spend your money on each month ensure that you prioritise debt over savings. Stop taking on more short-term debt. Mark a debt-freedom day on your calendar and stick to it.

4 – Look to the future

Starting a pension is likely to be a big priority for many people in 2010. We recently heard proposals from the main political parties on the subject of pensions, all suggesting we will need to save more and work for longer. You cannot rely on the State for a sustainable level of income in retirement and that means you need to use a pension or another investment vehicle to create your own sources of income for later life.

5 – Pay less tax

No one enjoys paying tax but many of us fail to take the simple steps that enable us to pay less tax. Each and every year we waste an average of £132 per taxpayer because we don’t take some simple planning steps and maximise our tax allowances.

The simple steps you can take to pay less tax include making sure savings and investments producing taxable income are held in the name of the lowest earning spouse and using your annual Individual Savings Account (ISA) allowance. From 6th April 2010 we can each invest up to £10,200 each year into a tax-efficient ISA.

6 – Review your mortgage

The ‘credit crunch’ has made getting good mortgage deals more challenging, yet it remains important to review your mortgage regularly to ensure you are paying a competitive rate of interest. If you are on your lender’s standard variable rate (SVR) then you might be able to access a better product, saving you money each month which can go towards your other financial objectives.

7 – Sort out your financial affairs

If you don’t have a Will, get one. You can write your own Will but there are some major risks involved with this DIY approach, so meet with a solicitor to get this organised. If you die without a Will, your estate will be distributed according to laws created in 1925. It is no surprise that these laws probably do not reflect modern thinking on inheritance! Don’t risk dying ‘Intestate’.

At the same time give some thought to family financial protection, particularly what would happen to your family from a financial perspective if you were to die, lose your income or contract a critical illness such as cancer. It is possible to insure against these risks but you need to quantify them first. If you have existing life assurance plans, review them to make sure they remain competitive and appropriately structured.

8 – Meet with an Independent Financial Adviser

Make 2010 the year that you carry out a comprehensive review of your personal finances and Financial Planning with an impartial professional who has access to the tools and knowledge needed to improve your current and future position. Most IFA’s offer a free initial consultation with no obligation so they can identify areas that they can help you with and you can grill them about their qualifications, experiences and charges.

There are plenty of money saving experts out there, all with lots of different suggestions on the best ways to save money. The best ways to save money will depend on your personal circumstances and objectives in life. There is no ‘one size fits all’ approach to saving money.

If you haven’t reviewed your expenditure for a while then you are likely to be able to make substantial savings in 2010. What you do with these savings is up to you, but with analysts predicting a challenging second half in 2010, there is no harm in cutting back on what you spend and using these savings to pay off expensive debts or boost the size of your emergency fund.

Here are ten ways to save money in 2010:

1 – Review your mortgage

A mortgage is likely to be your largest item of monthly expenditure. Whilst the Bank Rate fell to the historic low of 0.5% in 2009, many mortgage interest rates remained at much higher levels. The recent partial recovery in house prices should favour those hoping to remortgage to a better deal, with the loan-to-value (LTV) making borrowers eligible for a more competitive rate.

2 – Save money on utilities

This week we saw the price of oil climb to over $78 a barrel, the highest price in nearly a month. As the world economy continues to recover, we expect to see higher oil prices in 2010 and this will result in a higher price for domestic energy supplies.

This article we published during Energy Saving Week in October described some simple ways to save money on your energy bills.

3 – Review your life assurance

The premiums you pay each month for life assurance, critical illness cover, income protection insurance and private medical insurance can quickly add up to a substantial amount. If it has been more than a couple of years since you started a protection policy, speak to an independent financial adviser to review the cover you have in place. You might discover that the cover you have in place is now redundant or that you are paying over the odds for the level of cover you have.

4 – Leave the car at home

Another, and more immediate, consequence of higher oil prices will be an increase in the cost of petrol and diesel. If you can leave your car at home more often, you will save money on the cost of fuel and also reduce wear and tear on the vehicle. You might also save money on your car insurance if you can reduce your annual mileage. And of course there are health benefits associated with walking or cycling rather than driving.

If your journey requires a car, then more fuel efficient driving practices can also save you money. Keep the car tyres properly inflated, reduce the weight carried in your vehicle, leave the air conditioning switched off and accelerate smoothly.

5 – Make a budget (and stick to it)

A great way to avoid wasting money is to have a written budget each month and make sure you stick to it. By deciding in advance where you will spend your money, you should make it easier to avoid the temptation to spend on frivalous or unnecessary items. Once you have made your budget, review it on a regular basis so you can compare where you planned to spend your money with where you actually spent it.

6 – Become a Freegan

Becoming a Freegan will not appeal to everyone, but there are money saving lessons to learn from their philosophy. At the most basic level, by living simply, reducing your consumption and sharing resources with others, you will be able to save a lot of money which can then be redirected towards other financial objectives.

7 – Get rid of your landline telephone

The newly introduced ‘broadband tax’ of 50p per month on landline telephones will make a lot of people think about the purpose of their phone lines in 2010. With low-cost mobile phone packages and free VoIP internet telephone calls (using free software such as Skype), you might determine that the few hundred pounds you spend each year on telephone line rental could be better used elsewhere.

8 – Have a water meter fitted

Speaking from personal experience, getting a water meter fitted at my house a few years ago was one of the biggest money saving items I have experienced. Rather than paying based on estimate usage, you only pay for the water you actually use.

The water regulator Ofwat estimates that getting a water meter fitted can reduce household water consumption by between 9% and 21%. On an average household water bill of £312, this is a saving of up to £66 a year.

9 – Cancel your TV subscription

For a lot of people, this money saving tip in 2010 will be a step too far, but cancelling your satellite television package subscription can save you a lot of money. The most expensive Sky TV package (Sky+HD with Sky World) is nearly £60 a month, so you will save over £700 in 2010 if you can bring yourself to live without the sports and movies they offer.

The introduction of Freesat in the UK means that, after the initial outlay for a Freesat receiver and dish, there is no need to pay monthly subscriptions to get access to a good range of satellite television channels. Add free Internet TV services such as the BBC iPlayer and Channel 4 On Demand (4OD) to the mix, and you might find the transition from paid to ‘free’ TV a little less painless than you originally expected.

10 – Always shop around

Your golden money saving rule in 2010 should be to always shop around. The Internet makes it quick and easy to compare prices on just about any product or service.

You can even use the Internet on your mobile phone handset to compare prices when you are physically in the store about to make a purchasing decision. This can be useful if you want to buy the item on the spot, but need some ammunition to haggle with the shop assistant before parting with your cash.

Martin Bamford is site editor of BrilliantWithMoney and a Chartered Financial Planner at Informed Choice. You can follow him on Twitter @martinbamford.

Unlike our continental European neighbours, ownership rather than renting takes first place in the UK.

‘Getting on the property ladder’ is something of an obsession, right up there with discussing house prices at dinner parties or trying to guess which will be the next up and coming neighbourhood.

According to some new research from Scottish Provident, the British love affair with property ownership could be waning.

Of those surveyed, only 51% believe that property ownership is critical or very important for a reasonable standard of living. This figure appears to contrast sharply with property price boom of the past 15-20 years.

In fact, it is a decrease of 9 percentage points since the last time Scottish Provident commissioned their “High Wire” report in 2003. Back then, 60% of us thought that owning our homes was essential for a reasonable standard of living.

So, what has changed?

Property ownership has always been very demanding from a financial perspective. It is a serious financial commitment.

The vast majority of us buy property financed by a mortgage; usually the biggest bank loan we will ever have. Over the past year or so, getting access to mortgages has been like, well, getting money off a banker. It’s been something between extremely challenging and impossible.

When the banks realised they were technically insolvent and went cap in hand to world governments for a taxpayer funded bailout, one of the first things they cut back on was new mortgage lending.

The latest figures from the Council of Mortgage Lenders suggest that things are now improving, with the number of mortgages taken out to buy a home rising to the highest level for almost two years in October. We took out 55,000 mortgages for new purchases in October. This is the highest monthly total since December 2007.

To put these numbers into context, the lending figures in October are a 9% increase on the previous month and more than double the January 2009 low of 23,000 mortgages.

It is interesting to note from the Scottish Provident research that it is those in the 55-64 age group who have experienced the greatest change in attitude towards home ownership. 44% of those in this age group see owning their own home as very important for a reasonable standard of living. This is a 17% fall compared to 2003, when the figure for this age group stood at 61%.

The ‘credit crunch’ and general turmoil in global economies which acted as a catalyst for recent property price falls might be one of a number of factors which have started to fundamentally change our views on property ownership in the UK. The concept of a ‘job for life’ also appears to be rapidly disappearing, reducing confidence that mortgage repayments will always be met from steady employed earnings.

Naturally renting property, the main alternative to home ownership, comes at a cost as well.

In the current low interest rate environment, it is easy to identify rental costs in excess of ten times the equivalent mortgage costs for the equivalent property. This depends to some extent on the mortgage deal people are able to access (or are fortunate enough to be have left with when the music stopped) but in general terms renting can look like a very expensive alternative right now.

It will be fascinating to see how attitudes might change on this subject in the future. When it comes to any form of investment, people have notoriously short memories, so give it a few more years and there is every chance that the British public will fall in love with property ownership all over again.

Here are the ten things you need to know about the Pre-Budget Report:

1 – Income tax freeze

Income tax rates, allowances and thresholds will be frozen for the 2010/11 tax year at current rates. What this means in practical terms is that if your earnings rise next tax year, so will the amount of income tax you pay.

2 – VAT back to 17.5%

Value Added Tax (VAT) returns to 17.5% from the temporarily discounted rate of 15% on 1st January 2010. Retailers and other VAT-registered businesses will have to reprice their goods and services accordingly. We shouldn’t rule out VAT at 20% in the short-term, particularly as the UK has one of the lowest rates of VAT in Europe.

3 – New 50% income tax rate

On 6th April 2010 a new higher rate of income tax is being introduced at 50% on earnings over £150,000. At the same time, the personal allowance will be reduced by £1 for every £2 of earnings over £100,000. Higher earnings are going to be paying a lot more income tax in 2010/11.

4 – National Insurance hike in 2011/12

National Insurance contributions (NICs) for employees, employers and the self-employed are going up by a further 0.5% (so 1% in total) from 6th April 2011. The primary contribution limit is also going up so those earning less than £20,000 will not be paying more NICs.

5 – Pensions get more complicated

The world of pensions is becoming even more complex for higher earners, with immediate changes to the anti-forestalling measures which will capture those earning £130,000 rather than the previous £150,000 earnings threshold introduced in April.

6 – Basic State pension increases

The basic State pension is going up by 2.5% in April 2010 even though the Retail Prices Index (RPI) measure of price inflation remains in negative territory. This increase will only apply to the core part of the basic State pension, with other additional payments frozen at current levels.

7 – Banker Bonus Tax

If you are a banker and you receive a discretionary bonus of more than £25,000 between now and 5th April 2010, your employer will be taxed at 50% with the introduction of a Bank Payroll Tax (BPT).

8 – Inheritance Tax nil-rate band freeze

The inheritance tax nil-rate band has been frozen at £325,000 for 2010/11, which means estates will have higher IHT bills next tax year if property prices continue to increase as the economy enters recovery.

9 – Small business corporation tax rise deferred

If you run a small business, the planned 1% increase in the small companies’ corporation tax rate has been deferred for a year. It will rise from 21% to 22% in 2011/12.

10 – 50p a month broadband tax

Every household with a fixed line telephone will be taxed 50p a month to fund the roll-out of high speed broadband Internet access to 90% of homes by the end of 2017.

So, that’s the Pre-Budget Report 2009 in a nutshell. Ten points that you need to know and consider in terms of your own personal financial planning.

If you would like to read a more detailed briefing note and analysis of the main personal finance measures, you can download a free 17 page special report from the Informed Choice website at http://www.icl-ifa.co.uk/2009/12/prebudget-report-highlights-analysis/.

You could probably fill a book (or two) with all of the words of wisdom we hear on a daily basis from financial experts. Some are shockingly simple. Others more complex; requiring a lot more thought and energy to get results.

The simple rules are usually the best. If I had to choose the single most important financial ‘rule’, it would be this:

Spend less than you earn.

There is nothing new or original about this ‘rule’. In fact, it is so simple it might be described as blindingly obvious.

Until you accept this simple financial rule, there is little sense in pursuing the complicated stuff. Time and money spent on learning the secrets of the investment experts or sitting in workshops listening to salespeople exposing the virtues of becoming a property millionaire is likely to be wasted until you get this under your belt.

Spend less than you earn.

In practical terms this means budgeting and making sure your net (after tax) income consistently exceeds your committed and discretionary expenditure.

Getting this right often means a) cutting your expenditure, b) increasing your income, or c) a combination of the two. The wider you can make this gap (in a positive sense), the better. It then matters what you do with the surplus income each month.

Martin Bamford is site editor of BrilliantWithMoney and a Chartered Financial Planner at Informed Choice. You can follow him on Twitter @martinbamford.

With so many personal finance books on the market, it can sometimes be challenging to know which ones to read to get the best results.

When I was working through the various financial planning qualifications and preparing to write my own books, I read as many personal finance books as I could get my hands on.

Here is a small selection (in no particular order) of those I believe you must read if you want to become brilliant with money. For each book I have included a non-affiliate link to Amazon.co.uk, in keeping with our very strict policy on revenue for this website.

Please add your own suggestions to this list using the comments facility.

1 – Rich Dad, Poor Dad

Controversy continues to surround the author of this book, Robert T. Kiyosaki. It seems unlikely that Rich Dad, Poor Dad is an accurate autobiography, but it is an inspiring read by any standards. As with all personal finance books from across the pond, the details in this book can be largely ignored as they cater for the US audience with their own tax and investment systems. For the purpose of financial inspiration though, this is one book that will not disappoint.

2 – The Soul Millionaire: True Wealth is Within Your Reach

I’ve had the pleasure of knowing David Scarlett, a former Financial Planner, for several years and his book The Soul Millionaire is without doubt one of the best on the subject of financial freedom written by a British author. It’s quite profound and deep in places, and the overall message is inspirational, much like spending time with David himself.

3 – The Number: What Do You Need for the Rest of Your Life, and What Will It Cost?

My colleague Andrew introduced me to this book earlier this year. The Number by Lee Eisenberg is a fantastic introduction to the concept of lifetime Financial Planning, helping readers work out their own ‘number’; how much money they need to have in their ‘pot’ to last throughout retirement. Whilst principally a retirement planning guide, this concept of working out your own number should be applied to Financial Planning in a wider sense.

4 – Seven Stages of Money Maturity

George Kinder is the founder of the life planning movement in the US, which applies a more spiritual and holistic approach to conventional Financial Planning. Seven Stages of Money Maturity is fairly tough going for a British audience as much of the approach does not translate well to our more reserved culture, yet it is a worthwhile read, particularly if you are interested in learning more about how Financial Planning should integrate with your life goals and objectives. I particularly enjoyed the snippets of Buddhist wisdom within this book and that alone has encouraged me to learn more about this.

5 – Smarter Investing: Simpler Decisions for Better Results

Tim Hale’s book is popular amongst Financial Planners as it describes the importance of asset allocation when making intelligent investment decisions. It explains that active fund management is often expensive and does not always add value, so encourages a passive approach to investing money. If you are investing money then you must understand the importance of asset allocation, so Smarter Investing is a great book to read.

6 – The Financial Times Guide to Reading the Financial Pages

This was one of the first books I read when I entered the Financial Planning profession, and it enabled me to get so much more value from reading the FT (and other financial pages).

The FT is possibly the most important newspaper to read for those keen to become brilliant with money. You should aim to at least read FT Weekend on Saturday or Sunday, but ideally make it your daily newspaper if you want to become truly connected to the world of business and finance.

Until I read The Financial Times Guide to Reading the Financial Pages, the tables of data found in the financial pages were a complete mystery. This is by far the best book I have found when it comes to clarifying the meaning of what you will find in the FT.

7 – The Rules of Wealth: A Personal Code for Prosperity

I had a sneak preview of this book when the publisher asked me to read the manuscript and check the technical aspects for accuracy. Richard Templar has done a great job with The Rules of Wealth by describing the simple principles behind building financial wealth. This is a great book for the beginner and it is written in a manner that really engages the reader. If you already have a good level of basic personal finance knowledge then you will probably want to skip this book and opt for something a little more advanced.

8 – The Money Machine: How the City Works

Unless you work in the City, or know someone who does, then the financial system can be difficult to understand. The Money Machine by Philip Coggan does a great job of introducing the financial markets and particularly the City of London to newcomers. If you were thinking of starting a career in the City, or simply interested in finding out more about how the financial sector in the UK operates, then this is the book for you.

9 – Fundology: The Secrets of Successful Fund Investing

John Chatfeild-Roberts has one of the best track records as a fund and stock picker in the world of fund management. Fundology is quite an advanced text about the intricate workings of different investment funds and how to go about selecting your own investments. The early chapters get quite technical, but there is a good glossary which makes it easy to understand the infrequent jargon. If nothing else, this book might convince the investor that picking funds is not as simple as looking for good past performance.

10 – The 4-hour Work Week: Escape the 9-5, Live Anywhere and Join the New Rich

Whilst not strictly a personal finance book, The 4-hour Work Week needs to be on the bookshelf of anyone interested in pursuing the goal of financial freedom. Tim Ferriss is an inspirational author and I am a frequent visitor to his blog where he expands on many of the concepts within the book. The 4-hour Work Week turns the conventional idea of retirement on its head by introducing the concept of ‘mini-retirements’. Readers of this book might not aspire to the same hectic and high achieving lifestyle the author has experienced to date, but reading this should at least open your eyes to the world of possibilities that come by bucking conventional financial planning ideas.

11 – The Money Diet: The Ultimate Guide to Shedding Pounds Off Your Bills and Saving Money on Everything!

Martin Lewis is well known as the ‘money saving expert’ and The Money Diet is a great guide to cutting your expenditure in a whole range of areas. Use this book to understand how to save money, as reducing your outgoings is an important part of what you need to do to become wealthier.

When reading this it is important to remember that Lewis is a journalist rather than a qualified financial adviser, so take his tips on financial advice and planning with a pinch of salt. Where he does excel is on getting better deals from various suppliers of products and services. You should be able to read this and cut at least a few hundred pounds a year off your household expenditure, making the cover price a very good investment.

12 – A Bit on the Side: 500 Ways to Boost Your Income

Creating wealth is not just about cutting costs. You also need to increase your earnings to widen the gap between expenditure and income. A Bit on the Side by Jasmine Birtles, well known as TV’s Money Magpie, should help you identify at least a couple of ways to supplement your income from employment, helping you create more revenue to direct towards your financial objectives.

13 – Status Anxiety

Again, not strictly a personal finance book, but Status Anxiety is an important read if you want to understand what causes us to spend money to keep up with the Joneses. If you can understand that rarely mentioned social anxiety and overcome it, you should be in a position to make better informed spending decisions; spending money on the things that will advance your financial objectives rather than add to your status in the hope this will improve your standing in society.

14 – How to be Free

How to be Free will not appeal to everyone, but for those who want to learn more about decoupling from a consumerist society, this is an invaluable read. Tom Hodgkinson’s manifesto for simpler living translates into an action plan for cheaper living, and lower expenditure means less pressure on your financial resources. There is a bigger message here, but the financial implications of following some of his tips could be significant. And it’s a very enjoyable read. Chapter two inspired me to learn to play the Ukulele earlier this year so I have Tom to thank for that!

Martin Bamford is site editor of BrilliantWithMoney and a Chartered Financial Planner at Informed Choice.

This means that the Office of Fair Trading will not now be able to investigate the fairness (or otherwise) of unauthorised overdraft charges.

Clearly this news is a blow for the millions of banking customers who stood to be able to reclaim billions of pounds in bank charges.

It’s also pretty bad news for the claims management firms who appear to have cropped up in recent months specifically to handle these claims, some would say unnecessarily.

Good news for some

It is good news, however, for the banks and their shareholders, which includes the taxpayer in a number of cases.

The banks stood to lose up to £2.6 billion in annual revenues from this source – a huge amount of money, but not much in the overall scheme of things when it comes to banking profits.

Barclays alone made a profit of nearly £3bn in the first half of this year and HSBC reported a similar figure. The UK banking sector makes somewhere in the region of £20bn in profits every year.

The myth of ‘free’ banking

One possible consequence of the banks losing their case this morning was an end to ‘free’ banking. Of course banking is not and never has been ‘free’.

The charges associated with using banking services might not be particularly explicit, but they certainly exist and can be substantial in some cases.

Here are just a few of the ways you pay for banking services, even if you have not suffered unauthorised overdraft charges.

1 – Fees for premium accounts

You’re probably familiar with this deal. Banks might not charge explicit fees for conventional current accounts but they do charge them if you ‘upgrade’ to a premium account.

These typically come with a bundle of services you might or might not purchase elsewhere. Often this will include breakdown cover, travel insurance, mobile phone insurance and commission-free currency exchange. Oh, and of course a shiny debit card.

If you go to the open market and research the individual cost of each service, it might look like a reasonable deal in comparison. The problem arises when you do not actually use all of the services or they are services you would not have purchased ordinarily.

For example, you might find your mobile phone is already insured as part of your home contents insurance and you can just as easily exchange your cash for foreign currency at the Post Office with no commission charges.

2 – Lower interest rates on deposits

This is a big source of profit for the banks. When you deposit money with them, either within a current account or a savings account, the rate of interest you receive will be less than the amount of interest or investment return they will earn on your money.

Apathy is an important part of this source of profit for the banks. They might attract savers with a market leading interest rate on their savings account, but then after a year or more reduce this to an uncompetitive level. They do this because they know most customers will not bother to move their money to another bank. They profit from your apathy.

The best way to minimise this cost of banking is to keep your accounts under regular review and move them when you need to move them. The more proactive bank customers become when it comes to getting the most competitive interest rates, the more competitive each bank will need to be to retain their customers.

3 – The higher cost of borrowing

As well as savings, there is a margin when it comes to borrowing.

When you take out a personal loan, mortgage or credit card, the cost of borrowing (the interest you pay on your debt) is much higher than what it costs for your bank to lend you the money.

Banks also make profits from you by charging arrangement fees and redemption fees on loans. In addition, they like to bolt-on expensive insurance policies when selling debt.

4 – Uncompetitive financial products

Perhaps the least explicit way in which the banks made money from their customers is through the sale of uncompetitive financial products. This includes protection policies (including life assurance) with uncompetitive premiums and investment products with high charges and poor performance.

Banks typically offer financial products from one provider or, at best, a limited panel. Because of this, the terms available on these products are unlikely to be the best across all areas. The only way to ensure you consistently get the best terms is to use an independent financial adviser, or at least shop around to get the best deal.

Martin Bamford is site editor of BrilliantWithMoney and a Chartered Financial Planner at Informed Choice. You can follow him on Twitter @martinbamford.

Money is supposed to be a tool to help you be happy.

Sometimes we think, “if only I had X I’d be happy”, but when we get X, we think “if only I had X plus Y, I’d be happy”. And so on.

Without getting technical, we’re not happy because:

-We confuse our values, motivations, wants and goals, which are all linked but are all different,

-We don’t understand whose finger is on our “want” buttons”.

-Those buttons get pressed and we lose control of our happiness.

This article is about a way that you can get your finger on your own buttons!

Nearly all of us want more things than we can afford. If we buy the bigger house, we can’t also have the yacht. We have to make choices between what we want enough to use our limited resources buying and what we might like, but isn’t worth sacrificing something else to have.

We can buy more than we can really afford on credit, but we still can’t have everything. So, which option makes more sense to you:

1. Decide what you really want, buy it, then see how much is left and maybe buy things that you want less?

2. Buy whatever you fancy buying, what a magazine says you ought to buy, what your friends have etc. irrespective of whether you want those things the most and whether, in fact you want them at all?

Bearing in mind that you almost certainly have to stop buying at some point, you probably think that the first one is sensible, but possibly do the second!

The exercise

Imagine that you’ve got £25 million, what are you going to spend it on?

You might buy a house and a plane or go on a trip around the world, whatever you like. Make a note of the first 15 things.

Try to make it fairly detailed; if you want a house, what sort, how big, what would it have in the way of facilities? If you’d invest the money, what would you want as income from it and why? If you would quit your job, what would you want to do with your time?

Partly, it is fun to have a dream about what you’d do. Partly, you start to use your imagination and create a vision of what really motivates you. A more important aspect of the exercise is that you think about what you would like to spend time doing and what you value. But the real benefit of this exercise is that you can look at that list and see where the things on it have come from.

For example, if you want a 25 bedroom house with 15 acres of grounds, a swimming pool, stables etc., why?

Do you dream of having a huge family and keeping horses? What often happens is that people say they would have a huge house in which they would rattle around and end up living in one wing, they would have holiday homes in places that they would visit twice and get bored, want horses they wouldn’t ride and planes they would be scared of flying.

Look again at your list, and work out where the ideas for those things came from. Are they things you want for yourself, or has someone or something pushed your buttons for you?

Once you’ve done that, reflect:

Do multi-millionaires (like you) have to have a house to rival the Beckhams? Do you want a Ferrari because the annoying bloke at the gym has Porsche? There is an American definition of wealth that says you are rich if you earn $100 a year more than your wife’s, sister’s husband! Are most of the things on the list to compete with your brother-in-law?

Count up the things that come from media hype. Compare that to the wants that come from competing with friends and family, the stuff that “experts” have told you that you ought to want, the ones you’ve been sold, the ones that your children want. Then add up the ones that really fit your vision, that you would really like to have for yourself.

If you are like most people I coach, you’ll have only two or three that are really come from you. The others are to prove something to parents, siblings, friends, the bloke at the golf club or your children’s friends’ parents – or to have what Hello magazine or a TV programme tells you that you should want.

Reality check

This doesn’t mean that you mustn’t have big financial goals or think about making money. The point is that if you are going into debt to buy a Bentley because your favourite footballer has one or because you think society expects you to have one, I’d say that was perhaps not the wisest use of your money. If you’ve always wanted a Bentley, that is your dream and you plan how to afford it without giving up things you truly want even more (like time and money for family holidays), that’s fine.

At the other end of the money scale, if you think your perfect life would involve a smallholding and escaping the rat-race have a good think about it. There’s an established motivational theory that distinguishes “motivating factors”, where getting more drives you on, from “hygiene factors”, where having more doesn’t motivate, but not having can de-motivate. Generally, money is a hygiene factor. So having too little money is often a stressor.

So be practical, trying “the Good Life” or becoming a Buddhist monk is very rarely a realistic option. Think carefully about what you’d be giving up to have it in the same way as you would with any purchase.

Practicalities

You can do the exercise on your own (which saves any embarrassment!). Alternatively, it is interesting to do with your partner or a trusted friend, you can get a lot of insight into the factors that influence you both. You can also go through it with a trusted professional (it was developed for my coaching clients) like your independent financial adviser.

A caution though. The main function of the exercise is “guided self-insight”. The key word is self. You want a coach or friend who will help you reflect on your motives, desires etc. Their role is to hold a mirror up for you and for that they generally need to focus on you and be quiet. However well-meaning they are, I’d suggest not sharing your “first fifteen” with anybody whose main qualifications are that they keen to “help you with your issues” and who thinks they are “good with people”, or once read a book about coaching!

You can do it for yourself perfectly well, it is a simple tool to use to help you reflect on your own motivations, desires etc. You don’t need, or want, somebody trying to psycho-analyse you, finding hidden meanings in your statements or telling you what your values are and whether they are right or not!

And finally

Try the exercise. It’s fun, simple and neither fattening nor addictive. It also helps you to think about what your priorities are and most importantly, who has their finger on your buttons.

Kim Stephenson is the only Occupational Psychologist in the world who is also qualified as a financial advisor, as well as being a qualified coach and member of the BPS Special Group in Coaching Psychology. His corporate website (www.stephenson-consulting.co.uk) has more about his Occupational Psychology services and there’s more about his individual work on his LinkedIn profile http://uk.linkedin.com/in/kimstephenson.

It would seem that making sure financial security exists before we start a family is a must for a large number of people.

New research carried out for National Savings & Investments by the Future Foundation found that nearly two-thirds (64%) of people believe you should be financially secure before starting a family.

Our finances also influence important decisions about the planned size of our families. The research also found that 78% agreed standard of living was an influencing factor when deciding how many children to have.

When we have brought children into the world, it appears that our priorities change a little. Despite a steady increase in the sales of life assurance in recent years, the gap between the life cover we have and what we should have remains at over £2 trillion in the UK. That’s a pretty big gap!

Life assurance is not the only thing to think about when ensuring future financial security for your family. Here are the steps you might need to take to make sure that your family is financially secure in the future.

1 – Get protected

Often the place to start is putting in place sufficient life assurance cover. You should aim to do two things with this life assurance.

Firstly, to pay off all of your debts, including your mortgage and any credit cards. In the event of your untimely death, you would not want to put your family in the difficult position of having to sell the family home to repay the outstanding mortgage.

Secondly, you should provide enough capital or income to fund their lifestyle in the future. This is typically done with Family Income Benefit which pays the sum assured in the form of an annual benefit. It should be easier for your family to work with a regular income after your death than having to invest and manage a capital lump sum.

The first figure should be simple to calculate. You need to get a current balance from your mortgage provider and a figure for any other outstanding debts (credit cards, personal loans, store cards, car finance, etc). The second figure, working out how much your family would need longer term, is more challenging to calculate.

To arrive at a reasonable figure, you need to look at your current expenditure and think about what would change in the event of your death. Work through each item in your budget and agree with your partner how this expenditure might increase, decrease or be removed. Don’t forget to factor in future price inflation.

Remember that you might already have some financial resources in place in the event of your death. In particular, look for any death in service benefit from your employment, the life assurance element of any endowment policies and the value of your pension funds. In the case of pension funds, make sure you have nominated beneficiaries so the trustees know where you would like the value of your pension fund to go in the event of your death before retirement.

2 – Write a will

If you have children then you should have a will and this should reflect your current wishes. Within this you will want to do two things; provide instructions for who should receive your assets in the event of your death and appoint a guardian for your children.

If you die intestate (without a will) then the distribution of your assets will depend on your personal circumstances, but will be dictated by rules introduced in England and Wales in 1925. Instead of your money going to chosen beneficiaries it is instead paid to other relatives. If no such relatives exist, then the value of your estate is paid to the Crown.

Making a will is particularly important for unmarried couples who cohabit and/or have children together. It is also important if you have children from a previous relationship.

Getting your wishes formalised within a will is a sensible financial planning step to make sure that your money goes to the right people, with the minimum of fuss, in the event of your death.

3 – Stay organised

Financial aspects are only one immediate worry in the event of an unexpected death. The ability to quickly and easily place your hands on relevant financial documents is essential.

Whilst you might know precise where to find all of your important financial documents, there is a reasonable chance that your family will not.

Rather than putting them through the added stress of locating your paperwork, consider creating a ‘death folder’ which contains a summary of your assets, liabilities, accounts and financial policies, along with a copy of your will and other instructions. You might also want to include personal letters to your loved ones, for opening in the event of your death.

Staying organised involves more than just the financial and legal aspects of your life. Also think about your personal property. Keeping your life in general organised will make things much easier for your family to deal with in the event of an untimely death.

4 – It’s not just death

Whilst we often think about life assurance and wills in respect of family financial security, it is also important to consider the financial impact of other events. These might include the diagnosis of a critical illness, becoming disabled or suffering from a long-term sickness. All of these events can have a detrimental impact on your financial capability, potentially resulting in financial trouble for your family.

It is possible to put in place financial protection for all of these events. Critical illness cover, permanent and total disability cover, and income replacement insurance are all readily available types of financial protection. Your ability and willingness to put these things in place will depend, to a large extent, on affordability.

Whilst in an ideal world you would want to insure against every possibility, in practical terms you will need to prioritise and then align protection with your budget. The first step is to consider the various risks and find out how much it would cost to insure against each one occurring.

5- Keep things under review

Planning for the future financial security of your family is not a ‘one off’ event. It is something you need to keep under regular review to take into consideration changing circumstances.

A formal annual review of your plans makes real sense. You should also take a closer look at your arrangements each time you experience a ‘life event’ such as a change of job or the arrival of a new child.

Martin Bamford is site editor at BrilliantWithMoney and a Chartered Financial Planner at Informed Choice. You can follow him on Twitter @martinbamford.