How do you go into the New Year? Are you usually full of new resolutions, new changes, new habits? Or do you see the New Year for what it is, another new year!
Whatever way you look at it, it’s nice to know that there is a fresh start. It can be a good time to think about changing and creating new habits, and how learnings from the previous year can be incorporated into the new one.
Is managing your money ever on the list? In a 2020 study by YouGov, 39% of participants said they’d like to save more money – fourth on the list of resolutions and the biggest non-health resolution.
It is a good time to think about money management and ways you can make small improvements on your progress in the year before, whether your financial position has changed drastically, or you want to get a better handle on your savings, or you just went a bit overboard at Christmas.
Financial resolutions (all resolutions really…)
One important thing to remember with any resolution, they must be manageable – don’t set extreme stretching targets that might not be attainable, and even worse could put you off trying to tackle them altogether. If you have one bigger overall goal, look at the smaller steps it will take to reach it and celebrate as you conquer each one.
Keep on top of your spending
We know how many times the phrases ‘set a budget’ or ‘stick to a budget’ are begrudgingly said, but having a budget really is a valuable asset in seeing exactly where and how you spend your money. It’s as simple as listing all your money coming in, and all the money you spend, which can then help you plan where you could cut back, or stop spending altogether – it can be an eye-opener to see how much the weekly takeaway or cup of coffee to go adds up!
There’s lots of budget trackers and calculators online and through apps, which can help you organise and clearly see your spending month on month. You can also check out any features your online banking might have – Danske customers can use the Spending Overview in their apps to see the complete breakdown of all their spending over certain amounts of time.
And failing those, good old fashioned spreadsheets, or even a piece of paper or note on your phone to help you keep track of your spending. Only spend what you have.
With the budget in place, it should cover any bills or other payments that come from your account, leaving you with some savings and some money left to spend throughout the week or month.
Only spend what you have, and what you have allocated in your budget for spending – don’t spend if you don’t have it, and don’t need it!
Over the past couple of years, there has been a big rise in the use of ‘Buy Now Pay Later’ sites, as people spent more in lockdown, or looked to them for support. In a number of online retailers, they are listed as a way to pay for your goods. If using the likes of these sites, it’s important to read through the terms and conditions fully, and to ensure you’re not committing to expenses that you can’t afford.
When spending, try to think – why you are buying? Do you really need it? Could it wait until you have saved for it? Are you spending more than you earn?
Build a saving habit
Once you’ve set your budget out, you can use it to see where and what you can afford to save across the year.
There’s a couple of reasons why people save, generally:
- To afford something specific (could be a car, house deposit, holiday, phone, item of clothing);
- To build up a ‘rainy day’ fund.
With the Covid-19 pandemic, the importance of the ‘rainy day’ funds has come into the fore, but unexpected expenses can happen any time, and could be anything from house or car repairs, health or vet bills. It’s always a good idea to have a little pot set aside just in case, and it can often help take some of the stress and worry away from the unexpected.
There’s no right or wrong answer to how much you should be saving, but it is good to have a think about:
- How much are your essentials?
- How much do you spend on your wants?
- Are you saving for something in particular?
- What would be your ideal ‘rainy fund’ total?
Exploring these and thinking about your goals can help set your targets for savings.
Learn more about money and finances
As you go through life, your relationship with money will change and adapt to your different stages – it’s important to have an open mind and keep learning about money and your finances, to help continue to build your financial confidence and wellbeing.
You can always grab a chat with friendly advisers in your own bank, to make sure you’re getting the most out of your products and that you’re getting the support you need.
If you’d like some support with your finances going into 2022, please get in touch with us. We can organise an appointment to have a review of your banking and see where you need any extra support. You can find out more here.
Or, if you’d prefer not to talk to us, there are plenty of independent organisations and charities that you can reach out to for help, read more here.