Did you make any New Year's resolutions last January? How did you do? The sad fact is that only 8% of us manage to stick with our good intentions. So here Kelly-Anne Byres helps lay out some simple promises you can make to help your finances in 2017.
Chances are Christmas hit you hard. The average family spends more than £800 celebrating Christmas each year, with the majority of the money being spent on food and drink, cards and decorations.
But a study carried out last year found that nearly a quarter (23%) of Britons feel under pressure to spend more than they can afford.
The Money Advice Trust's National Debtline found shopping bonanzas such as Black Friday and pleasing children were the main causes with one in 25 (4%) of people feeling under pressure to blow their budget.
The survey also suggested that people might be borrowing more this year than last to get through Christmas.
While December 31st is a day to reflect on the year gone by, January 1st is a time to look forward to the New Year.
If you are doing this with a credit card to pay off, debts to settle and a sinking feeling that you are going to have to tighten your belt for the first quarter, you are not alone.
But now is the perfect time to create a financial plan to help put you in a better situation by the time next Christmas rolls around.
So here we go....
1. Calculate your net worth
If you haven’t done so already, the New Year is as good a time as any for determining what you’re worth financially. Calculating your net worth is a key step to assessing your financial health and reaching your financial goals. Look closely at all your assets and liabilities, incomings and outgoings.
2. Make a plan
Look closely at where you need to make changes in your spending and saving habits. Set yourself a clear budget to cover necessities - mortgage, rent, bills, food - and then look at what you have left over each month. Pledge to put aside a realistic amount each month to pay off existing debts or to put into a savings pot.
3. Pay down your debt
Make debt repayment a priority this year. Having excessive debt can weigh on you and keep you from pursuing big life changes–like taking a new job or traveling. Sit down and add up how much you owe, how much you can reasonably put toward debt each month, and how long it will take you to become debt free.
For best results, try not to charge additional purchases on credit cards while you're trying to pay down what you owe. If you have high interest credit card balances, consider whether it would be more beneficial to pay off those high interest debts or to add to your savings. You should also explore the option of consolidating debts and moving your balance to a 0% interest credit card, setting up a payment plan to clear the debt within the 0% term.
4. Set a routine
Taking time to check in with your money is one of the best small changes you can make. When you know where your money is going it’s easier to consciously spend and save, and you’ll naturally end up making better decisions. Download a mobile app for your bank and you can log in daily to look at your balance and transfers. Being aware of your financial position is a habit you should create now.
5. Keep it simple
Don’t overcomplicate things. The easier you can make managing your money, the better. Make simple changes like closing any accounts that you’re no longer using or setting up automatic transfers to make saving easier.
6. Start investing
Investing is a long game but the earlier you begin, the better. There are lots of ways to do this and the Money Advice Service has an excellent handout to show you how to get started. Have a read of that here
The Bottom Line
Don't set unrealistic goals. After all, if you’re not where you want to be financially, it can be really easy to get caught up in negative thoughts. And if you fail to make all the changes you want to, this can make you feel worse.
If nothing else, this year make it a resolution to not be so hard on yourself about money missteps. No one is perfect and though you may make mistakes, it’s important to acknowledge them and find a way to move forward.
Here at KBL Accounts we can help you to manage your money and advise you on how to make the most of it. Give us a call this January and we can make some resolutions together!