Get the New Year off to a great start financially

By Hayley Hemmings
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It’s time to brace yourself for what seems like such a long month before payday comes around again – good ol’ January.

Surviving January is a challenge for millions, according to the Money Advice Service. This time last year, almost one in three Britons felt pressured to spend more than they could afford over the festive season, whilst one in ten fell into debt or even further into debt as a result of overspending.

Even if Christmas didn’t end up leaving you sorely in the red, January is a good time to take stock of where you are financially, with a view to improving your finances for the year ahead.

Follow these steps below to get your finances on the right track for the New Year:

1. Evaluate your current money situation

Take some time to sit down and go through your bank statements to evaluate your recent spending and check your balance. If you haven’t already got a budget to work to, now is a good time to create one.

The easiest way to create a budget is to list down all your monthly outgoings first. You can do this on paper, in a spreadsheet, or in this budget planner. Include fixed bills like your rent/mortgage, council tax and any direct debits. Also include an estimated amount for variable costs, like your food shopping or fun money.

Then, subtract your total outgoings from your income to see what you’re left with. The results may be good or bad, but either way, it’s best to know so that you can start improving your finances for the coming months.

2. Work out your financial priorities for 2017

What would you love to achieve in 2017? Will some savings help you along the way? Are you desperate to get out of debt for good, or take a sabbatical or perhaps even change jobs?

Money doesn’t make the world go around, but having enough certainly helps when it comes to achieving your life goals and dreams.

Once you’ve taken stock of your current finances, decide what financial goals you need to be focusing on 2017. Make your goals specific and measurable, by setting yourself some timelines to work to along with an action plan of how you’ll get there.

Most importantly, make sure your financial goals are realistic. Saying to yourself that you’ll pay off your £10K debt this year might sound like a spectacular goal to work towards. However, such a goal might prove hard to achieve if you know you’ll need a £10K pay rise to make that happen.

3. Kick debt to the kerb!

Speaking of debt, January is a great time to think about hitting your debt where it hurts, especially if you relied on credit to fund some or all of Christmas. By paying down your debt, in turn you’ll be freeing up some more disposable income for yourself in the future.

Make a note of the debt balances you have, along with interest rates and work out which debts you’ll tackle first. Many people decide to pay off the higher interest debts first as this makes mathematical sense, but you may decide to start paying off the smallest balances to begin with (known as the debt snowball method).

The advantage with the debt snowball method is that it usually doesn’t take long to get rid of one debt completely – and that in itself is very motivating. Successful debt payoff isn’t just about being savvy with interest rates, it’s about what’s going to actually work for you and make you stick to overpaying your debt.

Give your debt repayments a boost by:

Overpaying what you can, when you can - you don’t have to wait until the end of the month, just make a payment when you have some spare cash to hand.

Raising more cash - sell unwanted Christmas presents on eBay (Zeek is a great site to sell vouchers that you don’t want).

Transferring balances to 0% interest – it’s always worth checking whether you can get a cheaper deal on your debt, to save on interest every month.

Using savings to pay off your debt - with saving rates being as piddly as they are right now, it may make financial sense to pay off some or all of your debt with savings. This is only the case if you’re being charged more in debt interest than the amount of savings interest you can earn.

4. Establish a “financial workout routine”

If you’re the type of person to check your bank balance once in a blue moon, you might want to establish some kind of routine where you can keep an eye on your financial progress.

Keep tabs on your spending

One financial aspect to continually monitor is spending habits. Hands up if you’re happy to keep all your future receipts so you can log them into a spreadsheet? Nope, just me then?

You don’t have to go the extreme with financial tracking, but it’s a good idea to check your bank account weekly, to make sure everything’s in order and by doing so, you’ll also be able to see easily whether you’re overspending.

 

Use technology to manage your finances “on the go”

If you have a smartphone, you can help yourself to stay in the black by downloading a budgeting app that closely tracks your spending and alerts you when there’s a problem.

Some budgeting apps, like Money Dashboard, gather all your accounts into one place, so you can have a clear visual overview of what’s happening across all your accounts.

 

Monitor your credit score

You can take advantage of a free trial with one of the UK’s credit reference agencies (Experian, Equifax or Call Credit) to access your credit report.

If you’ve already had a free trial before, you’ll have to pay to join up again. However, doing this a couple of times per year can be worth it, especially if you’re thinking of applying for a big line of credit, like a mortgage.

Your credit report will give you your credit score and you can also keep track of your lending commitments on there and check to see if there are any alerts on your report. For example, you’ll be able to see hard footprints from credit searches or whether there are any issues caused by electoral roll errors.

Take a look at this handy article which explains more about credit scores and what they mean.

5. Keep positive about money matters and reward yourself

When you’re a bit skint, as many people are in January, it’s normal to start feeling a bit depressed or even guilty about your financial situation. However, if you can get past any negative feelings you’re experiencing and start to build a positive money mindset, you’ll soon start reaping the rewards, both financially and emotionally.

The best way to instil a positive money mindset is to begin making positive changes to your finances. That means acknowledging your current situation; learning from past mistakes and getting yourself firmly back in control of your spending.

Keep motivated by rewarding yourself when you make some financial process with some sort of treat, such as going out for dinner or buying something new.

Top Takeaway

If your finances are causing you to suffer the January blues, take action now to improve your situation! It might not be easy to achieve your financial goals but by following a measurable action plan and keeping your finances at the forefront of your mind, you should be able to make some real improvements during 2017.

Will 2017 be “your year” when it comes to your finances?


Author Bio: Hayley Hemmings is a freelance writer, blogger and tea addict from Yorkshire. She’s passionate about money matters, frugal living and loves anything handmade. When Hayley’s not writing, she’s most likely to be found enjoying snuggles with her little girl or walking her border collie through the beautiful Yorkshire countryside.  

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