The start of a new year is a fresh opportunity to set some good (and achievable) financial goals. Recent studies have found that 1 in 5 UK adults have no financial goals, instead planning their financial budgets only days or weeks ahead – leading to overspending and poor money management as a result.
That’s why in today’s post, we’re discussing some New Year’s resolutions that your wallet will thank you for – helping you hit the ground running with your finances. From defining a realistic budget to paying off debt, with our guide, you’ll be able to set some financial goals that will help you achieve your monetary ambitions.
Define a realistic budget
Budgeting is the best place to start when it comes to being financially successful, but it’s essential that you understand how to budget. If you’ve found yourself in a little financial difficulty this year, it can be tempting to set a high budget for the coming year which, in reality, may be quite unachievable.
Whether it’s your first time setting a budget or you’ve tried to set a budget before and haven’t been able to stick to it, introducing realistic targets is essential. Some examples of achievable goals could be setting a month-by-month budget, or dividing your spending allowance into weekly amounts. However to adhere to these budgets, it’s essential that you stop spending when you exceed your limit, or at least withdraw the amount you’ve gone over from next month’s allowance.
Start saving money
Whether you’d like to buy a new home or are saving for a new car, your budgeting tools should allow you to make savings with your end goal in sight. Although some months might be better than others, 10% is an achievable amount to save as a baseline. After all, if you’re left with more money at the end of the month, you could always transfer that over into your savings.
An efficient way to help these savings mount up is to go through your grocery bill and decide on what’s really necessary (and, more importantly, what’s not!). For example, you may be purchasing a weekly magazine which you could read for free online. Alternatively, sacrificing a few dinners out per month could pay off in the long term – cutting back on these unnecessary expenses is a great place to start when it comes to saving a few extra pounds. To keep track of your spending, consider downloading banking apps such as Monzo, which offers in-app budgeting and saving.
Once you’ve got to grips with saving, investing those funds is a great way to help them grow. Investing allows your money to accumulate at a much faster rate – but it’s easy to get carried away, which isn’t beneficial for managing debt.
To prevent getting lost in interest rates and investing more than you can afford, consider using a financial planner to determine how much you can afford to invest. A financial planner will give advice based on your personal situation, while also helping you understand the risks and benefits of investing – ensuring you avoid risks which may not pay off. If investing sounds like something you’d be interested in, take some time to learn about the stock market – after all, the more knowledgeable you are, the better informed your investing decisions will be.
Pay off debt
By paying off debt, you’ll be free to work with the money you’re earning and focus on putting that towards saving. Even paying off a small sum each month could reduce the amount of interest you’re paying on your existing debt, and is subsequently a great step towards rebuilding credit. So, there’s no time like the present to get started on your debt payment schedule.
Creating a debt payment schedule is a great way to plan how much you’re going to pay off, when you’re going to pay it and ensure that the amount you’re paying off is affordable in conjunction with your income. Some ideas which may help you on your way to managing debt include selling old items such as clothes or household items on sites such as eBay or Gumtree, or reducing your spending on unnecessary items to contribute to debt payments.
The key to making a good New Year’s resolution is ensuring that your financial goals are realistic and achievable. It’s easy to become disillusioned when a financial goal feels extremely far from reach. So, setting small, regular goals is the best way to help the pennies pile up this new year.