Sort out your own problems as chill looms

Superficially, 2004 has been a reasonable year for our personal finances. Low unemployment, a strong economy and - until recently - rising house prices have kept most people feeling confident.

The shops continue to discount goods so we feel we are saving money even as we spend and, if we need to borrow it is easy to get credit at knock-down rates of interest.

Yet if we have time to think more deeply about our finances it is clear that unresolved problems are undermining our security. Pensions are in a mess; the state scheme is overcomplicated while private pensions have been undermined by falling returns, increased longevity and broken promises.

Other forms of long-term stock market investment look unappealing because of mediocre returns. The ongoing collapse of endowment policies continues to engender suspicion among small investors about the investment industry.

Then there is our £1 trillion mountain of personal debt. Research by the Bank of England shows that, generally, people are coping well with debt repayments now, but the bank is rightly concerned about what will happen if economic conditions deteriorate, as they could next year. The housing market is looking sickly and mortgage repayments are likely to rise again. If jobs begin to disappear the government can expect to face an increasingly disgruntled electorate in the run-up to the general election. The uncertainties looming over people's personal finances could even influence the timing of the election; sooner rather than later.

Voters who are struggling to pay bills may be more inclined than previously to take the government to task over big financial issues, pensions in particular.

But even if the government is given a sharp kick for its record in personal finance issues, there will be no speedy fixes. It will take years to turn around the state pension system and restore confidence in private pensions if, indeed, it can ever be done. There is a danger that disillusion with government policies - or lack of them - becomes a personal excuse to do nothing ourselves.

Try to cut back on borrowing and repay debt, as house prices cannot be relied on in the immediate future to provide an ever-increasing buffer to borrow against. Try to cultivate a saving habit, even though it is very difficult in a society where it has become socially unacceptable to say that you cannot afford to keep spending. Do question whether a pension is the only way to invest for old age; finding ways to earn past the traditional retirement age may be as useful.

Whatever happens, don't wait for politicians to sort it all out for you.