5 Financial Resolutions for the New Year
21st January 2021
January can be a tough month financially with the costs of Christmas behind us. That's why it's the best time of the year to start reassessing how we manage our money, take stock of what we've got and start to come up with New Year’s resolution ideas and ways we can improve in the coming months.
As we look at the fallout of the festive season on our finances, it’s time to come up with solutions that can help us to begin balancing the books again, and with 2022 underway, you should start as you mean to go on. Here, we explore five financial resolutions to add to your New Year’s resolution lists that can get your bank balance back on track.
Choose a resolution and join us for 31 Days to Actually Achieve Your Financial Resolutions - our challenge to make those resolutions happen, one task at a time.
1. Start Saving a Set Amount Each Month
One good New Year’s resolution to help you reinvigorate your incomings and outgoings is to rethink your saving habits. Successful saving forms the basis of healthy finances so setting aside a set amount each month is not only an excellent practice to get into, but it can provide a safety net when you need it most.
Whether you’ve tried saving in the past or you’re yet to attempt it, here are some straightforward steps you can take to help you start saving up:
- Examine your income: Note your monthly salary - the figure you receive each month should be firmly in your mind before you start setting up any sort of savings plan as this is the pot you have to work with.
- Assess your spending: Look carefully at your bank statements for the past 12 months and note any regular debits to your account. Highlight essentials like utility bills and the mortgage, then flag up other expenses, such as travel costs and supermarket trips. Don't forget to make a note of any spending on big events throughout the year including birthdays and Christmas.
- Decide on your limit: Once you know what your regular outgoings are, you can start to create a budget. This will allow you to account for these regular expenditures in the coming year while also giving you the opportunity to set a limit for how much you want to put into savings each month. From there, you can choose a savings account that works for you. Whether this is £10 or £100, you’ll soon find your savings start to grow.
2. Cut Down on Indulgent Expenses
When it comes to New Year’s resolution ideas, cutting back on impulse spending and splurges might not be the most appealing when it's the perfect way to cheer yourself up during the dark wintry days, not to mention having the January sales to contend with.
However, while some of these discounted products may prove hard to resist, especially when you have emails and notifications telling you all about them, it’s worth foregoing that amazing deal in order to help get your finances in order.
Having a clear budget going into 2022 can help you to reduce your luxury purchases and instead help you refocus on the essentials. By sticking to a budget, you can still factor in the odd treat from time to time but reducing the number of indulgent buys means you can set off on the path to a healthier bank balance.
3. Reduce Your Utility Bills
When was the last time you looked closely at your utility bills? If it’s been a while since you considered updating your tariff or switching providers, it’s worth looking into it now. According to Ofgem, you could save around £300 annually by swapping to an alternative.
Another way to reduce your utility bills is to assess how much energy you’re using around the home. Simple things such as switching off the lights in rooms that aren’t being used and unplugging appliances that have a ‘standby’ light, such as the TV or washing machine, all go a long way to saving you cash. Other tips include having a shower rather than a bath and only boiling as much water in the kettle as you need.
Also, look at your heating. How often are you heating rooms that aren’t being used? Switch off radiators in these spaces and check they’re working effectively so that they’re releasing enough warmth into the room. In addition, make sure no draughts are getting in and put your heating on a timer so that you’re not warming an empty house while no one’s there to benefit from it.
4. Improve and Maintain Your Credit Rating
Your credit rating is important. Having a good rating means the difference between being accepted for a mortgage on a home or finance on a car or not. This is because when you take out a loan or you hire something, for example a mobile phone on contract, your credit score is the thing that those selling to you will use to decide if you’re a risky person to lend to.
If you need to find out what your score is, you can use a credit report service, such as Experian, Equifax or Clearscore. These services show you your current report and your rating and you can then decide how to maintain or improve it.
One way you can improve your rating is to take out a small, manageable loan. By choosing one that suits your financial budget and making the repayments on time you can steadily improve your credit score. Similarly, using a credit card to buy something can have a positive effect but make sure you don’t go too close to your credit limit and that you can make your payments on time.
5. Move Bank Account
Like your utility bills, it can be easy to stick with the one bank. Perhaps you signed up for your current account when you were a student and never quite felt the need to change, or maybe you were drawn to the initial perks and ended up staying put.
A good New Year’s resolution for your finances is to start shopping around. Look at the other current accounts out there and see what perks and offers are available. While you’re doing this, it’s worth noting where the best deals for your savings are, too. Compare and contrast what’s available and work out if it’s beneficial to switch.
These are just some New Year’s resolution ideas to kick-start your finances in 2022. If you can stick to even a couple of these, you’ll soon start to see the difference in your bank balance.