10 routes to riches in 2010

Ten tips to help you have a prosperous New Year and beyond.

2009 was tough for many people, not least the victims of redundancy and young people leaving school and university with little hope of finding work.

But no matter what 2009 was like for you and your family, prosperous or challenging, you can help make 2010 better with a bit of forward planning and a few clever moves. After all, who doesn't want to save money and make more money?

1. Be prepared

Nobody knows what's around the corner, as the current unemployment figure of 2.46 million testifies. This means that you should be aware of the possibility of redundancy -- whatever job you are in and however unlikely it seems. Double check what your redundancy package is, and if it's modest, or nothing, consider one of two things. You could take out a payment protection plan (sometimes called Accident, Sickness or Unemployment cover) that covers your earnings if you are be unable to work. If you take this route don't take the first quote offered and read this article for invaluable advice -- Make unemployment insurance work. Or save at least six months' salary in an instant-access savings account to cover you and your family should you lose your job.

2. Savings can save you

If you already have three or six months' ready cash in an instant-access account you may be able to afford to tie up any additional savings for longer. And this means looking at fixed rate bonds which can offer a higher rate of interest than many of the instant access accounts. If you choose to save your money for one year for example you can currently achieve interest of over 3% and this rises to over 5% if you can afford to keep your hands off your cash for five years. But remember that with any of these accounts you only get the interest rate advertised if you make no withdrawals during the time period -- so they are only worthwhile for money you can afford not to touch.

3. Beat the tax man

If you don't want to tie up your savings for the long term but you would like to earn a better rate than an instant-access account, ensure you use your annual tax-free ISA allowance. You can save up to £3,600 a year in cash savings and this rises to £5,100 on 6th April 2010. Cash ISAs work like any other savings account except you are not taxed on your interest. The taxman is giving a little back with ISAs, so grab it with both hands!

 4. Budget, budget, budget

Doing a budget seems like a lot of effort for little reward. But it's quite the opposite. It is the first step to taking responsibility for, and control over your finances and can help you get out of debt, plan for the future or just have more disposable cash. You need to have all of your financial documents to hand to make sure you really do the job properly. Keep a spending diary and use your bank statements to make it easier. Once you know where your money is going you can work out where to make savings. Crucially, be realistic about what you can afford.

5. Switch your credit card

If you are in debt, make it your priority to pay off, or make a decent dint in the amount you owe during 2010. Adopt our goal - Destroy your debt - to get a step-by-step guide on what to do, and to mark off tasks as you complete them.

The best tip if you owe money on a credit card is to look at the interest rate you are paying. You could be wasting hundreds of pounds a year in interest if you are paying your provider's APR for example. Switch to a 0% balance transfer card and benefit from paying nothing on your debt for a year or more. This way the money you actually repay comes straight off your debt rather than going to your card issuer as interest.

6. Rent out your home

If you've got a spare room at home use it to make money. By taking in a lodger you can make significant money -- and they might give you a hand with the housework. The Government will allow people to rent out a room and earn up to £4,250 a year tax-free. It's not for everyone but a parking space can also command good rental income, especially if you live in or around a town or city. Car parking spaces in Manchester for example can be easily rented out for £100 a month -- a nice little earner.

7. Change your car insurance deal

When the time comes to renew your car insurance don't accept the quote provided by your current insurer. By shopping around you can save hundreds of pounds. Also look at ways to cut the cost such as getting an alarm fitted, parking in a garage or driveway if you have one, and in a car park at work rather than on the street. And don't forget to check comprehensive cover prices as well as third party, as it is not always more expensive. In fact, in some cases it works out cheaper and you benefit from fuller cover.

 8. Overpay your mortgage

Paying your mortgage lender more than you have to may not seem like a great way to save money but it can work wonders for your finances. The cumulative effect of paying a bit more each month can total thousands of pounds in saved interest -- and you can shave years off your mortgage term. Overpaying works because when you pay more you reduce your overall debt, and this means next month you owe less interest. Over the long term this virtuous circle saves you thousands in unpaid interest and years off your mortgage term. Read Cut your mortgage costs and pay off your mortgage early for a step-by-step guide on how to do this.

9. Appetite for investment

Investing is not for everybody and it can be complex, as well as risky. But can also be a successful way to grow your wealth over the long term. Make no mistake; stock market investing is not a get-rich-quick scheme. You should be looking at a five-year investment as a minimum -- preferably more. If you are going to invest, a pooled investment vehicle, like a unit trust, is a good starter option. Your investment is added to that of other people's and spread widely across a range of shares. Not only do you spread the risk but also the buying and selling fees.

10. Property ladder

Remember that property can also be a useful long-term investment, but it is not going to make you rich overnight, as the last two years perfectly demonstrates. Many long-term property investors have been extremely successful, often making enough money to fund their retirement. But property should only be viewed as part of your pension planning, not a substitute for it.

Happy new year!

Use lovemoney.com's innovative new mortgage tool to find the best mortgage for you online

Get help from lovemoney.com

If you need help getting the best mortgage use our resources.

First, adopt this goal: Five ways to destroy your debt

Next, watch this video: How to... save when you've got no money

Then, why not have a wander over to Q&A and ask other lovemoney.com members for hints and tips about what worked best for them?

1st Time Buyers

Mortgages suitable for first time buyers with a maximum 15% deposit, sourced based on lowest payrate. Where a provider's logo is displayed products may be applied for directly.

Offset

Mortgages with an offset facility attached, sourced based on lowest payrate. Where a provider's logo is displayed products may be applied for directly.

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 4045 or email mortgages@lovemoney.com for more help.