New year new financial resolutions: here's how to keep them
It’s that time of year when we resolve to be smarter, slimmer, richer or less argumentative for the next 12 months. New Year Resolutions are thought to have started in Roman times, when people began each year by making promises to the god Janus, after whom the month of January is named. In Medieval times, knights took the “peacock vow” after Christmas to reaffirm their commitment to chivalry.
Fast-forward to today, we're much more likely to be considering how to get our finances in order.
The good news
Unlike deciding to lose weight or learn a language, financial New Year resolutions can be simple to start and easy to maintain. For example, if you decide to start saving more or making a regular investment all you need to do is set up your direct debit once, and then your payments are sorted for the rest of the year.
How to stick to your financial resolutions
According to research, the most common reasons for failing are:
- setting unrealistic goals (35%)
- not keeping track of progress (33%)
- forgetting about the resolution (23%)
- making too many resolutions (10%).
Source: Australian comparison website finder.com.au, poll of 2,000 people in 2014
The secret to keeping your financial resolutions for the whole of 2016 and beyond is deciding on one or two things that you want to change. Pick one small and achievable goal, and write it down.
Research has shown that vague aspirations, such as “I want to sort out my money” don’t really work. Instead, you should be really specific about what you want to achieve. Having clear goals and keeping a diary works too.
Here are some simple and effective ways to start new and healthy financial habits for 2016:
Clear your debt
Consider taking out a balance transfer credit card which could give you up to 32 months to pay back your debt, subject to a one-off transfer fee. Check out Moneysupermarket for the best deals.
Look at all your debts and find out how much interest you are paying on each one. Tackle the debts with the highest interest rate (known as APR) first.
Manage your spending
A very simple way to keep tabs on where you money goes and identify ‘leaking’ cash is to keep a log of what you spend every day in a notebook. You’ll be amazed how small amounts of habitual spending add up to significant amounts.
Get into the habit of saving on the essentials of life—finding cheaper petrol and combining your usual supermarket shop with a visit to one of the discount supermarkets for non-branded essentials.
Cancel non-essential direct debits like gym membership and magazine subscriptions if you don’t use them.
Ways to get saving
Rather than set yourself an unachievable goal, start instead by saving very small amounts to get into the savings habit—eg £5 or £10 a month.
This way you can slowly set up a fund with 3 months’ worth of emergency cash. A good option is a regular savings account because these tend to pay good rates of interest and give you the discipline of saving for a year.
Use a comparison site like Moneyfacts to find the best current deals.
4 smart money habits to cultivate in 2016
1. Be savvy and use money off vouchers, apps, voucher codes and group buying schemes such as VoucherCodes, TopCashback, and Groupon.
2. Set up direct debits to pay off your credit card and household bills so you don’t miss a payment.
3. Set aside a time once a week to review your finances and how much you are spending and saving.
4. Make a note in your diary for a fortnight before your insurance comes up for renewal, your current savings rate expires, or your credit card bill needs to be paid so that you have some time to prepare.
If you choose to take out an Investment ISA we’ll send you a £25 My Rewards card to spend at over 70 UK retailers such as Amazon, M&S, Next and John Lewis.
No advice has been provided by Scottish Friendly.
The information provided in this article was accurate at the time of publishing and should be read in the context of the date it was published. Views in this article are those of the author alone and do not necessarily represent the view of Scottish Friendly.