With the end of the year approaching, thoughts may be turning towards ways to better yourself next year. One of the most common resolutions is related to financial health.
With many UK adults in debt, finding ways to manage your money better is beneficial both now and in the future. Here are some ways you can manage your money better in the new year.
Review your budget and spending habits
The end of the year is the ideal time to do an analysis of your spending habits. Look at bank statements from the past twelve months and start listing outgoings against your income. Make sure you note any debt repayments as well as the interest on the loan.
Having a clear picture allows you to make any changes necessary to keep you on track. If you don’t have a head for numbers, there are online tools to help you budget.
Build or boost your savings and emergency fund
The recommendation is that everyone should have both an emergency fund and a savings pot. Having an emergency fund helps to prevent additional financial stress in high-pressure scenarios, whereas your savings account can be built for an aspiration or a large expense.
For the best return on your money, look for bank accounts which have good interest rates. By contributing to your account monthly, the interest will help your account grow a little bit extra.
Tackle debt and optimise your credit use
Tackling debt can feel intimidating, but there are strategies that may help. First, focus on your highest-interest debts. These are the ones which are going to cost the most overall. Try to make overpayments if you can to reduce the balance quickly. By eliminating these first, you are saving money that you would be paying in interest.
Responsible credit usage is a great tool for building your credit score. Being disciplined with spending and repaying supports long-term stability. If you are struggling to attain credit for car finance or a mortgage, see if you could benefit from a credit card for bad credit.
Set long-term goals and keep reviewing progress
Although it is nice to live in the moment, setting long-term financial goals helps to keep you on track. You may want to think about a house deposit, retirement or furthering your education. Break these goals down into realistic chunks. You could aim to save a certain amount towards the goal per month, or have a target for each year.
Make sure you keep reviewing your progress. If you are struggling to hit the milestone goal, assess your spending habits again. There may be areas where you can cut back a little.
Pushing back the deadline of your goal isn’t a bad thing, though. You can be realistic about your current financial needs and adjust accordingly to accommodate them.