The new year brings hope of renewal in all areas of life. We all dream of a fresh start for our health, wealth and happiness, and with so much focus on health in recent years most people are well informed on how to make positive changes for their physical and mental wellbeing, but do you know how you can keep your finances in good condition?
It’s time to claim control of your prosperity by adopting these New Year’s resolutions.
If you have been living paycheck to paycheck, it’s time to review your expenditure. Living within your means does not have to mean big changes. Reviewing your income and expenditure to create your very own budget can be enough to keep your finances in rein. Having a financial plan to follow will encourage you to stop tapping into savings or using credit cards, and can encourage you to start saving towards important financial goals.
There are always ways to reduce your monthly expenditure. An easy place to start is with your regular monthly bills. Check your subscription-based services and weigh out if it’s value for money based on how often you’ve used your membership. Are there any services which you can cut cords with? For example, do you really need both Netflix and Amazon Prime Video? You should also shop around for the best deals on any utility bills or insurance contracts that are due to expire soon. Aim to reduce your monthly cost on a couple of bills.
Depending on your income and the amount of debt you currently have it may be possible to clear out your arrears completely within one year, however, don’t fret if your debt is larger. Start by assessing your current financial situation and creating an affordable debt repayment plan. Decide how much of your disposable monthly income you can set aside for repaying your debt and calculate how much of your overall credit you will be able to repay by the end of the year. Aim to have your repayment plan finalised by the end of January so you can start repaying right away.
If you need professional help you can seek free and impartial debt advice from charities such as StepChange and National Debt Line.
Building savings doesn’t happen overnight, which is why you should start saving as soon as possible. Incorporate savings into your budget and set up an automatic standing order on your payday so that your savings amount is transferred to your account automatically. You should set long-term and short-term financial goals that you can work towards, however as an immediate action point you should work on building an emergency savings fund.
Your credit report reflects your creditworthiness which affects your ability to obtain credit, both short-term and long-term. It’s important to be aware that the information reported on your credit file may not always be correct or up to date. Errors can occur, but only you may be able to spot the mistake.
You can access your statutory credit report from any one of the three credit reference agencies: Experian, TransUnion and Equifax. The report will show your credit history to date but may not show you your credit score. If you spot anything that isn’t quite right on your credit file you can raise a dispute with the credit reference agency so that an investigation can take place. Please note that the different agencies may be reporting different information and if you are due to take a big financial step, such as getting a mortgage, it may be worth checking your report with all three agencies before you apply.
Has your credit score recently taken a hit? There is no better time than now to start repairing the damage. Luckily there are several easy things you can start doing straight away to improve your credit score. Paying your bills on time and repaying debt can undoubtedly have a positive effect on your credit rating. You should also avoid any new hard enquiries from credit applications if you’re focused on improving your credit score. Most importantly, once you have done the hard work, you should make it a habit to help you maintain your creditworthiness.
None of us are born with financial knowledge. It’s something we must learn on our own. If you’re lucky your parents may have passed on financial knowledge to you as a young adult, however in most cases people enter adulthood inadequately prepared. Thankfully, people are becoming more financially aware and there are plenty of educational resources available.
Personal finance classes are a very popular way to bring your knowledge up to scratch. There are also plenty of financial self-help books that will enrich your money management skills. Moreover, you can enlist the help of a professional finance adviser to help put you on the right track to achieving your goals.
Has the arrival of the New Year given you the inspiration to get your finances in order? Setting goals and making positive changes is easy, but can you ensure that you will stay motivated throughout the year? Remember to start by setting achievable goals and making small but permanent changes so you can slowly change your habits for the better.
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