It’s that time of year again. Every January we resolve to finally get fit, lose weight, and eat more healthily – but how many of these well-intentioned New Year’s resolutions ever come to pass?
If you’re anything like me, by February you’ve broken every resolution going. Instead of going for a run and joining that book club, you find yourself eating biscuits and watching Jeremy Kyle instead.
So this year I’ve decided to throw out my regular resolutions and instead make a plan that will be
a) achievable, and
b) will put more money in my pocket.
Here are my five simple money resolutions – give them a go too, you might surprise yourself!
Give yourself a quick financial health check
If you sometimes find yourself struggling to make payments, or simply want to cut out some of the wasteful ways you spend money, make this the year when you finally sort out your budget.
I know, I know – making a budget is not the most exciting thing you’ll ever do. But if you take just 30 minutes to use this nifty free online budget tool, you won’t regret it. It will improve your life in two simple ways:
- It’ll save you money: Once you can see all your incomings and outgoings in one place, you can instantly see where money is going to waste. You’ll be amazed at how much you can save with very little effort (did you know, for example, that a third of Brits spend over £2,000 a year just on lunchtime sandwiches and snacks?)
- It’ll make life less stressful: Constantly worrying about whether you’ve put aside enough money to pay for something gets exhausting quickly. If you create and update a simple budget, you’ll always know where you stand financially (and be far less stressed as a result!)
The other thing you can do as part of your basic financial health check is to check your credit rating.
Everyone has a credit rating based on their financial history – it’s what companies look at when they decide whether to lend you money or not.
The better your credit rating is, the better deals you get on things like credit cards, bank accounts, loans, mortgages, and even mobile phone contracts. But some people find that their report contains wrong or out of date information, which means their credit rating is lower than it should be.
Make sure your credit rating doesn’t have any inaccurate information – check your credit rating for free here.
(You get 30 days free access to your credit report, after which you have to pay – but you won’t pay a penny if you cancel within the 30 day free trial period).
For more information, look at our guide on how to improve your credit rating.
Prepare for next Christmas now
Even if Christmas is the last thing on your mind right now, remember that you can stock up on things like wrapping paper, Christmas cards, and decorations at dirt cheap prices in January, as shops are desperate to shift their stock.
With the average cost of a family Christmas lying between £400-£700, why not spread the cost over the whole year by putting aside £40-£50 a month in a separate Christmas savings account now?
Save money on your weekly shopping
Love it or loathe it, everyone has to go shopping. But it’s easy to make sure you get the most out of your pound every time you spend. If you do nothing else, here are three simple steps you can take to save money:
- Save on your essentials: Make sure you check our supermarket price checker. It’s especially intended for parents, and keeps track of the best prices for all our weekly essential household buys – like toilet paper, nappies and washing powder. So check before you shop.
- Plan meals in advance when you can: Planning your meals and weekly food shop in advance can save you money, time, and cut down on food waste massively. And it needn’t be a chore, either – check out our weekly free family meal planners – they’re cheap, tasty, healthy – and the shopping list is prepared for you!
- Get paid to shop: It’s possible to earn back hundreds of pounds a year simply by shopping through cashback websites. Some sites are better than others – in my experience the best two to sign up with are TopCashback and Quidco.
Get out of debt
If you’ve got debts you just can’t seem to shake off, have a look at our guide on how how to get out of debt in 10 simple steps.
Remember – if you are in debt but have savings, it usually makes sense to use your savings to pay off or reduce your debt.
Building up your savings is normally a good thing, but it doesn’t make sense if you’re in debt.
For example, say you have £1,000 debt on a credit card charging 19% interest. You’ll be paying £190 interest to the credit card company over a year.
Now imagine you also have £1,000 in a savings account. Even in a decent account, you’ll struggle to make more than £30-£40 a year in interest – at most.
So, you’d be at least £160 a year better off if you used your savings to pay off your debt – saving you a fortune on interest payments.
Review your pension contributions
So you thought my suggestion of making a budget was boring? I haven’t even got started on the pulse-pounding subject of pensions yet. I spoil you, I really do.
Why am I raising such a yawnsome subject? Because pensions are important, obviously – and the earlier you start saving, the better.
Pensions are a bit like going on a diet: small steps over the long-term achieves far more than taking action in fits and starts.
Pensions expert Andrew Tully of MGM Advantage cites the example of two savers who each pay £15,000 into a personal pension.
The first saver – let’s call her Anne – saves £500 a year from age 31 to 60.
Her friend Sarah, who is the same age, starts later and saves £1,000 a year between ages 46 and 60.
Assuming their funds grow by a modest 3.5% each year after charges and inflation, Anne will have a fund of £26,715 at 60. But Sarah – who has paid in exactly the same amount – will have only £19,971.
Despite paying in exactly the same amount of money, Anne is much better off than Sarah because her savings have been gaining interest for 15 more years.
It’s never too late to start saving – but as you can see, the earlier you start, the better!
You may have heard about pension ‘auto-enrolment’ in the news. The Government has been asking employers to automatically enrol eligible workers into a workplace pension scheme over the next few years. You can find out more about auto-enrolment here.
If you work for a large company, you may have been automatically enrolled already. However smaller companies (those who employ less than 250 people) don’t have to enrol their workers for another year or two yet.
You can ‘opt out’ of enrolment – but if your employer makes contributions into your pension, you are effectively throwing away free money if you do (it’s just that you won’t see the extra money until you retire).
See our full guide for more information on how to start a personal pension.