New Year Financial Resolutions
12th Feb 2024 Managing your Money
5 min read
At MoneyMagpie, we understand that sticking to your financial resolutions can be tough, so we’ve come up with some ideas to help. I am Vicky Parry: consumer expert and financial specialist over at MoneyMagpie.com.
Each month I will be joining you all on Readers Digest to
share some of the incredible ways you can navigate your financial life and help
empower you to make extra money, save money and even start investing.
Every year, two thirds of us make New Year’s
resolutions whether it’s starting a diet, quitting smoking or heading to the
gym, but when it comes to health and well-being in 2024, getting your finances
in order tops the list.
The average
household debt in the UK is £65,724, with at least £2,409 of that owed on
credit cards. Add to that the worry about paying energy and food bills and it’s
little wonder we’re all feeling stressed.
So what better way to use our cold, dark winter
evenings than to create some small but positive changes that could have a big
impact on your financial outlook for the year ahead?
Draw up a budget plan
With the dawn of a new year, we all start out
with good intentions to stick to our goals but without a long-term strategy in
place, they can easily
fall by the wayside. But always ask
yourself these two questions, Do I Need It?
Could I Do It More Cheaply?
Get your bank statements, household bills and
receipts and work
out where you can save money. Make
sure you have the best deals on everything from your broadband and TV to your
energy and food. Do you use the magazine and gym subscriptions you took
out? if not, cancel them.
I saved £600 last year on my car and house
insurance simply by shopping around and not settling for the renewal figure I’d
been sent. Customer loyalty, I
discovered, very seldom pays. Yes it’s
time consuming, but I felt a real sense of triumph when I saved such a huge sum
all for the price of a bit of searching on comparison websites.
Cutting out your £2.50 weekday coffee could
reduce your annual outgoing by £600.
Making and taking some lunch to work is both cheaper and healthier and
will save hundreds of pounds annual.
Image source:
Photo by Tamara Bellis on Unsplash
Work out how you are going to cut back so you
can free up money that you need to pay off your debt, and set up a direct debit
to pay off the one with the highest interest rate first. Once you’ve set it up there’s no dipping into
it for something else and it will help you keep on track.
Paying off your highest debt first is known as
the avalanche method while paying off the smallest is called the snowball
method.
Balance Transfer Cards
If you are struggling
with making payments consider a 0% interest balance
transfer card. You get a new card to
pay off debt on old credit and store cards so that you owe just one card - you
are consolidating your debt. The card
you transfer will have an agreed period during which you pay no interest on the
debt. There may be a small fee, but it means you become debt free quicker
because more of your repayment is going to tackle the money owed, rather than
being lost in high interest rates.
Barclaycard are currently offering 29 months at
0%, as long as you pass their ID and fraud checks, while Santander offer 26
months. It’s worth shopping around to see what suits you and your debt best.
Savings - If you’ve got some money in the bank,
consider using some of it to pay off your bigger debts. It will free up money you’ve been having to
spend, plus the interest, and you can start to save up again without the worry
of all that debt.
Financial Goals
Look back at last year’s
spending and see where you made financial mistakes and where you succeeded.
Then look at what you hope to achieve financially during 2024. Maybe it’s paying off a credit card or
finding a way to make some extra cash to put towards a deposit for a mortgage.
It’s only by analysing your spending and writing it down that you can see things
clearly and stick to your goals.
Sometimes it will mean short-term pain for long-term gain, but keep you
goal in sight.
Pay Fast and Buy Slow - Always try and pay your
bills as soon as they come in to avoid late fees, which, with interest payment,
only add to your debt. If you are an
impulse shopper, try and put yourself on pause. Do you really need it?
Start a Side Hustle
Baby sitting, pet
sitting, tutoring,
crafting,
baking. If you’ve got a hobby or skills you can put
to good use to make a bit of extra money then why not make a resolution to
develop it this year? It could bring in
a bit of extra income and help get those debts down. If you don’t have debts then what a great way
to create savings.
Talk to friends and family - there’s a lot of
stigma about money and debts. We’ll talk about all sorts of things but if we’re
having money worries we tend to keep it to ourselves. Jasmine Birtles, founder of MoneyMagpie.com
is partnering with debt charity, Community
Money Advice (CMA) to launch Stop The Shame campaign in a bid to get people
talking about money and help with the country’s debt crisis.
Experts at CMA admit shame and guilt are the
main reasons people let their debts escalate and if they’d been faced sooner,
they wouldn’t have spiraled out of control.
Check your pension
You are never too young to start
a pension. Yes, it might seem like it’s years into the future but you will
need to put money aside whether through a work pension scheme or a private one.
The earlier you start, the lower the payments are likely to be. Ask to speak to someone and see what is on
offer.
Check your state pension and how much you are on
track to get by going to gov.uk/check-state-pension it will help you see where there are
shortfalls.
It might not seem like a priority but a little
saved now can make all the difference when it comes to retirement. Putting £30 extra away a month from the age
of 27 could see someone accumulate an extra £100,000 by the time they reach the
current state pension age.
And track down lost pensions. There are 2.8 million forgotten pension pots
from people who’ve moved employer. The
average lost among 55-75 year olds is £16,004.
So why not use the government’s pension tracking service to contact your
old employer, or use
a service like Gretel.
And finally, what better way to be a great
financial role model and keep your resolutions on track than to start saving
for your children’s future. Small
amounts will snowball and give them a nest egg that could help them keep their
financial resolutions when they grow up.
Oh, and don’t forget to take advantage of free
money when you see it. For example, at MoneyMagpie we’re currently giving away
£100 for Valentine’s Day. Enter
here.
Banner image credit: pexels.com 139050_Photo by Anthony 🙂
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