Ready to make some money resolutions this year? Financial journalist and author Laura Whateley shares her advice for making this year your most financially savvy yet.
January might feel like the worst month for your finances – with the hangover of Christmas frivolities and spending. On top of that, some of us are struggling to save. 40% of us have little to no savings and a quarter of us didn’t managing to save anything in 2018, according to the Monday Advice Service. Then there’s the financial uncertainty surrounding our future over Brexit…
But it’s not all bad news. When it comes to money, you can make this year your best yet by setting a few realistic intentions – whether it’s spending more mindfully or try a savvy new app to boost your savings.
Here are seven smart money resolutions from financial expert Laura Whateley.
1. I’ll be more mindful about spending
It’s easy to overspend when you don’t keep a check on your outgoings on a daily basis. So often, we tap our phones and contactless cards without even checking the transaction amount.
Just as you might start a food diary to monitor your meals, try to record how you’re spending and when. Do you spend in response to emotional triggers like feeling tired or stressed? Could you cut back on some of the biggest culprits, like expensive work lunches or Direct Debit subscriptions you didn’t have time to cancel?
2. I’ll set myself some spending and saving rules of thumb
Could you live on 90% of your existing salary? If so, give it a try and save the 10%. If housing isn’t too expensive for you, consider the 50/30/20 budget, where 50% of your income is spent on essentials such as rent or mortgage, travel and food; 30% on treats or luxuries such as clothes or eating out; and 20% to put towards a rainy day or your pension.
You could also try the 5:2 diet with your money, where you have two ‘no spend’ days a week. Start by swapping meals out for batch cooking and hosting at home rather than going out.
3. I’ll pay off high-interest debt first
There’s no point in saving hard if you are simultaneously paying off big credit card or loan bills with high interest rates. Chipping away at minimum payments on credit cards means you will be paying off loans for years to come. So, focus on debts first and potentially speak to a financial advisor for specialist advice.
4. I’ll try clever saving apps
If you struggle to find enough money at the end of the month, try saving automatically as you go. Rounding up apps such as Starling and Moneybox help you save a little every time you spend. So, if you spend £2.60 on a drink, it will round it up to £3 and save the 40p for you.
Similarly, Plum is a new savings assistant that monitors your spending and automatically transfers small lumps of money into a savings pot. It’s surprising how quickly it adds up.
5. I’ll sort out my credit score
Having a poor credit history can make it difficult to secure a mortgage or even a mobile phone deal, and will impact how much these things cost you. Check your credit history through a credit rating agency such as Experian. You only need to make a few simple changes to boost it. These include making sure you’re on the electoral roll, repaying all bills on time or carefully managing the debt you already have.
6. I won’t forget about my pension
We all need to review how much we’re saving for the future. Pensions are the most efficient way to save as they offer generous tax breaks, particularly for higher-rate taxpayers. If you are employed, you will be automatically enrolled into a pension, but look at how much you’re saving into it. Pensions experts suggest that the automatic amount taken out probably won’t be enough to support you in your older age.
You might also want to consider investing in stocks and shares rather than cash to try to beat the impact of inflation with any money you’re prepared to lock away for at least five to ten years.
Which money resolutions will you make this year?
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