New Year’s resolutions are a time for self-improvement and what better way than to make a fresh start with your personal finances. Below are our top five tips, to get you on the way to a brighter financial future. Small changes like these will be much easier to stick to than a fad diet. And the benefits will last much longer.
Know your starting point: Tally up your income with your outgoings on a spreadsheet. You might discover the expenses that have caused you to overspend every month. Perhaps you could get a better deal on your gas or electricity or cut back on nights out and clothes shopping? Facing your financial situation head on is the best way to improve financial stability and get your personal finances under control for the New Year.
Plan for 2017: Map out events and expenses you know about for next year so that you can keep your finances in check. Do you have a big trip planned for the summer? So you need to cut back on treats or buying lunch each day, rather than preparing your own? If you keep that event in mind it will keep you focused, when you might be tempted to by the latest great deal. Even if something costs € 1100 and then it goes on sale for € 880, you did not save € 290. You spent € 880. It’s also an idea to put money aside each month in an ‘Emergency Fund’ for the unexpected expenses. Use both your 2016 review and this plan to create a budget which you can stick to.
List out your liabilities: You might have multiple types of debt e.g. student loans, mortgage or credit cards. Not all debt is created equal, however. So rank these in terms of annual interest rate. This is likely to be the credit card debt and make sure you direct all cash to paying down balances. Once you get down to zero commit to paying off the full amount each month. It is also worth looking at overdraft charges and your credit card rates. Is it time to switch account providers while you pay off debt? Always check the latest 0% credit card offers. Retail banks can these days offer relatively generous benefits for switching current accounts.
Set a financial goal: Be specific about how you want to improve your finances in 2017. Rather than say ‘I want to be less in debt’, instead make it timed and measurable; ‘I want to reduce the debt in my current account by € 2500 by December 2017’. Keep this as a reminder on your phone and make sure to pay off a little each month as detailed in your budget.
Get financially literate: Download a podcast or read a financial education book every month to get up to date with the best ways to manage your money. Consistently applying yourself to learn as much as you can about the financial markets, the nature of money, and investments in general, is essential to improving your current financial situation and ensuring financial stability in the long-term.
Here’s to a happy and financially rewarding 2017!