New Year Money Resolutions
Ten resolutions for managing and staying in control of your finances
Thinking about how to manage your money, or how to review your financial situation, can be a daunting prospect. There are lots of elements involved in the process, and many areas of finances to think about, and it can often seem overwhelming. By breaking your finances down into manageable chunks, and reviewing them one by one, the process of sorting out your finances will become a lot less intimidating.
Make it your New Year Money Resolution to work your way through the different areas of your finances to ensure they are in good order for 2012, or to make this the year you get them on track. How you work through the resolutions depends on your own situation: which areas do you need to review, and how much reviewing do they need? Perhaps you could tackle one area each month, or maybe there is one subject which you find particularly problematic, in which case take longer solving the issues.
1) Make sure you are better financially prepared for Christmas 2012
It may seem like a long way off, but this is the best time to start thinking about affording next Christmas. The amount you spent will still be fresh in your head, as (no doubt) will the consequential strain on your pocket! So what better time to work out how much the celebrations, gifts, food, travel etc. cost you, and then develop an affordable plan for the coming year?
Work through the ten steps in Money Resolution Tips 1 to ensure an affordable Christmas 2012.
2) Budget for holidays and leisure activities to make sure you are making the most out of your money, and are able to afford the things important to your preferred lifestyle
In the current economic climate, with household incomes being increasingly squeezed, we all have to make careful choices over spending. We are constantly being told to prioritise ‘needs’ over ‘wants’ and to cut back on unnecessary expenditure to ensure financial security. So it is no wonder that a slight feeling of guilt pervades when you splash out on that holiday or gym membership. Indeed for over 2 million of us, an annual holiday is such a high priority that we’ll borrow an average of £1000+ to fund it! It is, of course, important that we do take time to enjoy ourselves, even if the economic climate is gloomy, and as long as it’s affordable that guilty feeling is unnecessary. Plan for holidays and leisure activities now to make sure you don’t find yourself using money you don’t have to fund them.
Use the 10 tips in Money Resolution Tips 2 to make an affordable plan for holidays and leisure activities in 2013.
3) Review the cost of running your home and make sure you are getting the best deals on utility bills
Did you know that putting a roof over our heads, heating and maintaining our homes takes on average just over a quarter of our gross monthly income? It is important that you are clear on exactly how much it is costing you to ensure it’s not more than you think, and so you can have a look for cheaper options on things like utilities and insurance. The MoneySavingExpert.com website is a great place to compare prices.
If you’re moving home in 2013 or thinking about it, it is a good idea to work out the cost of moving. Perhaps you are thinking of moving in order to decrease your household costs? It is important that moving costs (i.e. estate agent fees, stamp duty etc.) and change in location are included in working out the expenses and benefits of moving. Perhaps a change of location will mean less household expenditure, but the cost of the commute will cancel out what you are saving?
Use the table to work out the cost of running your home, and read over the ten tips for evaluating the efficiency of your household expenditure and for weighing up the benefits and cost of moving in Money Resolution Tips 3.
4) Create a workable budget that covers all areas of expenditure
The best way to stay on track of your money is, of course, to budget! Whilst it is great to produce budgets for individual areas of your finances, it is also important that you draw out an overall budget which accounts for them all. Our online BudgetBuilder is a great tool that helps you produce a budget.
The ten steps in Money Resolution Tips 4 will help you plan your income and expenditure into a realistic and sustainable budget.
5) Take time to understand credit; the basics of using it and the pitfalls to avoid
Credit is a word that is banded about a lot...credit cards, credit ratings, credit crunches are just a few of the terms people use on an everyday basis. But how much do you actually understand? It is worthwhile making sure you are clear about credit; the basics of using it and what to avoid. If used wisely, credit can save money. However, if used to purchase immediately something that can’t actually be afforded – wanting now and not worrying about tomorrow- it can soon end up amounting to a large debt which is a struggle to repay.
For a description and advice on different types of credit, and for information on how to use credit wisely, use the useful table and top ten tips in Money Resolution Tips 5.
6) Don’t bury your head in the sand if your budget shows a deficit – take action and make sure you're in control!
As you go through making your budgets and getting the most of your money by planning carefully, what happens if no matter how hard you try your budget shows a deficit? The first thing is not to panic! There are things that can be done to improve your situation. The most important things to do are to not ignore the problem, prioritise your debts, seek to increase your income and decrease your expenditure, and always contact a source of free, independent advice should you find yourself in an unmanageable situation , for example the Consumer Credit Counselling Service (CCCS).
See Money Resolution Tips 6 for a more comprehensive guide to dealing with a deficit.
7) So you’ve created your budget...now stick to it!
Writing up your budget is only part of the process, the hard part is sticking to it! It is often tempting to spend a bit more one month, promising yourself you’ll hold back in the next, but how often does that promise actually prevail? There are many ways to help you budget. Our Spendometer phone app helps you track your spending, consider using separate bank accounts for different payments (i.e. one for regular monthly bills, another for more irregular items such as car maintenance) and consider switching to monthly direct debits and re-organising your payments.
More tips for sticking to a budget can be found here in Money Resolution Tips 7.
8) Are you a student or have children going to university? Make sure you are aware of the financial options available, and are clued up on making your money go further whilst studying
Going off to university is often a daunting process, not only because of the work and new social experiences, but also because it is likely to be the first time you are financially responsible for yourself. It is important that students are aware of what they are eligible for (e.g. council tax exemption) and really understand student finance.
Our 2012/13 Student Money Manual is full of information on student loans, tuition fees, bursaries and grants, as well as advice on budgeting, banks and how to make your money go further.
The top ten tips in Money Resolution Tips 8 will also help you make the most of your new financial responsibility.
9) Create a financial safety net: emergency funds, retirement income and wills are all essentials for financial security
Make this the year you really plan ahead for a financially secure future. Have you got a retirement income sorted, or is this something you need to review? Have you made a will to ensure security for your loved-ones, money and possessions after you die? And do you have an ‘emergency fund’ should an unexpected financially-burdening situation crop up on you?
Start putting plans into place for ensure a financially stable future, and use the ten tips in Money Resolution Tips 9 to guide you.
10) Review your finances as you go along
It is important that you constantly review your budget and money situation to ensure you are always on track, and so that your plans always reflect reality. If your bills change, you change job or move house, your budget too will have to change to accommodate the different income against expenditure. You might also find that you are not sticking to the budget you made because it was unrealistic; perhaps you underestimated how much your weekly food shop was, or didn’t leave any room for unplanned expenditures. If this is the case, move the numbers around so it is more reflective of your spending.
Use Money Resolution Tips 10 on reviewing for help.
Top 10 Tips
These links refer to each resolution, giving you top ten tips and additional information - including useful contacts and budget sheet templates - on each one.
DOWNLOAD Money Resolution Tips 1
DOWNLOAD Money Resolution Tips 2
DOWNLOAD Money Resolution Tips 3
DOWNLOAD Money Resolution Tips 4
DOWNLOAD DAILY RECORD SPENDING
DOWNLOAD Money Resolution Tips 5
DOWNLOAD Money Resolution Tips 6
DOWNLOAD Money Resolution Tips 7
DOWNLOAD Money Resolution Tips 8
