When a new year begins, one of the areas many of us want to improve on is our finances. With money, we all want to make better decisions that ensure a better standard of living for us in the future and more peace of mind at present.
Although last year wasn’t the most pleasant of times for so many of us, it is vital we reflect on what that time meant for our finances. Outfits no longer seemed as important as next day delivery from our favourite retailers. We may have questioned the use of particular memberships and fancied a takeaway over another night of cooking. Whatever the circumstances may have been, we got to look at our finances differently.
Now it’s a new year, we need to turn over a new leaf with our money whilst ensuring that our wellbeing is still a priority. Here are five key tips for the year ahead.
Take charge of any debt you have
The holidays are always a time when most people find themselves spending more than they should. To get a clearer picture of how much you need to pay back, make a list of the type of debts you have (credit card, overdraft, loan, etc), the balance on each debt and each individual interest rate. Now you can see which debt is costing you the most, try to tackle them in that order. Other options are to get a 0% balance transfer on any credit cards you have so you pay 0% interest on what you owe for a set period of time. Last but not least, look into consolidating your debts into one loan with the main perk being one simple monthly repayment.
Manage your subscriptions
Many of us have music subscriptions, TV streaming subscriptions, beauty subscriptions and much more. The real question we have to ask ourselves is, how many do we actually need? At times we let money leave our account without considering if we are making use of those particular services. If you live with other people, check-in with them and see if they use some of the same services as you. There are always discounted subscriptions available for families and couples. There’s no harm in calling your providers and finding out if there are better deals available so you can all enjoy more services at a cheaper price.
.jpg?auto=format&w=1440&q=80)
Track your transactions
Whether you choose to make a spreadsheet or use apps such as Money Dashboard or Yolt, the only way you are going to be able to see what you’re spending is by tracking all your outgoings. Once you know where your hard-earned money is going, you can focus on creating better saving pots for any short, mid or long term plans you have.
Work on your credit score
It’s always a good time to work on your credit rating. If you ever decide to get out a loan or a mortgage, you want to be able to borrow the amount you desire at the lowest interest rate and such perks only come with a good credit score. Different reference agencies such as Experian and Equifax are available for you to check your score. With some agencies, you are given a free trial for a limited period of time which can include access to your credit report. This is a great way to ensure all information is accurate and if not, you can work on fixing anything that looks incorrect.
Improve your credit score by taking out a credit card if you don’t own one yet. Ensure that you spend wisely on it, be disciplined with making payments on time and pay off more than the minimum each month. Last but not least, try not to use your entire credit limit. Most lenders suggest keeping below a 30% credit utilisation.
Create your own reward system
Taking steps to a better financial future is never an easy process. It requires you to be organised, to be diligent and to face the reality of your current situation. Every time you hit a financial goal, learn to celebrate that in a small, non-costly way. Whatever your version of patting yourself on the back looks like, recognise that your financial situation is getting better with each step.
Bola Sol is the author of HOW TO SAVE IT: FIX YOUR FINANCES, with a foreword by Moneybox, published by #Merky Books, £6.99