Today – New Year’s resolutions for personal finances
New Year’s resolutions for personal finances
John Ellmore, Director of Know Your Money
Christmas seems to start earlier and earlier each year, from the Christmas music in shops and on the radio, to the Black Friday and Cyber Monday sales that stretch well beyond their apparent single day occurrence. It doesn’t just seem to be the shops that encourage early festivities. Given the modern consumer’s hectic lifestyle, seasonal celebrations with friends and wider family members start earlier every year.
With such celebrations comes the inevitable spending. From dinner and drinks, to generous gift-giving, even the most frugal of revellers will find it difficult to stick within a strict budget throughout December. It’s no wonder, then, that so many of us enter the new year with less than healthy bank balances. Many can find the prospect of stretching a tight post-Christmas budget until pay day overwhelming and demoralising; and this is not helped by the January blues! However, it doesn’t have to be all doom and gloom. Why not use this as an opportunity to review and revamp your finances?
Like many New Year’s resolutions, the majority start January with high hopes and good intentions, only for old habits to re-emerge by the end of the month. So, how can we make positive and sustainable changes to our personal finances? I’m here to offer you a helping hand, with some of my (achievable) New Year’s resolutions that can help you get your finances back on track.
Get to know your finances
This may seem obvious, but you’d be surprised how many people put off a self-assessment of their finances because they are scared to find out how much they are actually spending. However, if you are going to make any lasting changes to your finances, this is where it all begins. To start with, you should review your incomings and outgoings, and understand exactly where your money is going each month. You don’t even have to write this down by hand; there are plenty of budgeting apps available, which can track your spending – some banks even offer this on mobile banking phone apps, so make sure you check your options! By monitoring your spending habits, you will easily be able to identify problematic spending behaviour and make changes; for example, cancelling that subscription to a magazine you never read. You’ll be amazed how getting to know your finances can make a massive difference to your spending habits.
Set yourself limits – and stick to them!
Budgeting is probably the hardest, and least appealing tactic to regain control of your personal finances. There are so many times you are confident you can limit your spending, but then a sneaky impulsive purchase throws your finances off! Unfortunately, however, self-discipline is vital, if you are to get your finances in check. The good news is, it’s not as difficult as you might think. The key to budgeting is planning. So, every week, plan out your social activities and give yourself a set spending amount. If you’re going for dinner, check out the menu first and plan exactly how much you can spend. Many online banking apps can also be a useful tool when setting a budget. For example, some challenger banks enable users to set a spending limit on certain cards, so you receive a notification when you are reaching the end of your limit. This is particularly useful if you feel your will-power falling and you are tempted to spend a little extra on something you perhaps don’t need. Once you get into the disciplined habit, you’ll be amazed how much easier it becomes.
Be creative with thriftiness
Getting your finances back on track doesn’t just have to be a case of denying yourself fun activities. It can offer an opportunity to embrace your creativity and come up with fun alternatives to expensive products or activities. For example, rather than meeting your friend for lunch to have a catch up, why not go for a walk instead? Not only is this free, but you will also get healthier in the process! Or, rather than buying birthday cards or gifts for your friends and family members, why not make them instead; they’ll appreciate the thought and effort you put into making their day so special, and you’ll appreciate the lack of expenses. The more creative you are with your thriftiness, the less it will feel like a chore, making it an easy (and fun!) resolution to stick to.
Compare your options
We all lead very busy lives and so, we can all be guilty of settling for the easiest option, rather than the most suitable option. However, comparing various options and shopping around for a better deal can be quicker than you think. We now have comparison websites to do this for us! Comparison sites gather information about goods and services – from breakdown cover to mortgages – and present a number of options to you in a clear table, so all you need to do is choose the option that suits you. You’ll be amazed at the savings you could be making, and it takes no time at all. Committing to comparing is one of the most achievable, and satisfying, personal finance resolutions you could make this year.
Set yourself a savings goal
When you’re cutting down on your expenses, it can feel a bit demotivating if you have no clear goal in mind. So, one of the most effective ways to get your finances in check is set yourself a savings goal. This could be anything from a house deposit to a new car or family holiday. Setting up a separate savings pot to make regular contributions is not just about improving your discipline – having an end goal in mind will ensure that you remain motivated to keep up the positive spending habits as you know all your hard work will be rewarded in the end.
Ask for help
Perhaps one of the most important New Year’s resolutions for personal finances is recognising when you need help.
Many of us struggling with our finances feel that we need to muddle through the financial maze alone, which can negatively impact our mental health – research from Know Your Money revealed that two fifths (41%) of Brits feel their mental health is deteriorating because of money troubles (particularly debt). This doesn’t have to be the case! If you’re struggling with debt, or any other money troubles, don’t be afraid to reach out to a trusted friend or family member, or even a charity such as StepChange for support. Discussing the problem with someone will be a massive weight off your mind, and your confidant may be able to help you to find a solution. Always speak you when you’re feeling worried about money – it will benefit both your mental health, and your bank balance.
John Ellmore is Director for Know Your Money. Know Your Money is an independent financial comparison website, launched in 2004. Run by a dedicated team, Know Your Money’s goal is to provide clear, accurate and transparent comparisons for a wide range of financial products, such as business loans, mortgages and car insurance.
I hope these Achievable New Year’s resolutions for personal finances are useful to you! –
You mya also enjoy my posy on why we celebrate boxing day