It’s that time of year again. When we start analyzing our bank statements and credit card bills, as well as reviewing the fixed-rate savings, cash ISAs and personal pensions on the market. Once the festive season has been and gone, the financial season is well and truly upon us. Yes, the new financial year and ISA season are a few months down the line, but now’s the time when we vow to sort out our finances and actually stick to the plans we put in place.
Here are a few tips to help you do just that.
Review your budget – or create your first one
You can’t save if you don’t have a budget. First, start by documenting all your income – this will include your monthly salary, any benefits you’re entitled to, and any interest you earn on your existing savings. Then you need to track all your outgoings. Your necessary expenses such as bills, rent, etc. are immediately apparent, but it’s the rest of your spending which is much more difficult to keep track of. Keep a diary of your spending habits so you can track everything you spend, such as your weekly fuel costs or what you are outlaying for food, and once you start doing this it will become easy to see where you can cut back, as well as how much you can save.
Develop a strategy to pay off your debt
You need to get rid of those credit card bills and your bank overdraft. Consider transferring your credit card to one which offers incentives for balance transfers so you can start paying off the debt rather than just the interest. Set aside a lump sum each month that covers more than the interest which will mean living within your means but it will be worth it a few months down the line.
See where you can cut your necessary expenses
Car insurance and your energy bills might be necessary expenses, but it doesn’t mean you can’t look to cut down on these costs. When renewing your car insurance don’t automatically renew; if you shop around on comparison sites you may well find a better deal. The same applies when it comes to your energy bills. If you quote your existing tariff to a new supplier they’ll always try and beat it to secure your custom. Once you do change also elect to pay by direct debit, as energy suppliers offer better rates to customers who agree with upfront to meet the payment deadlines.
Other ways to improve your finances include reviewing your savings accounts – whether it’s a fixed rate, instant access, or a Cash ISA, as well as checking up on your pension options, whilst also reviewing your living situation, which will all help. Getting your finances in order can be a difficult process, but it’s well worth it.
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