Indeed, the festive period can be an expensive one, no matter your circumstances, so January marks the perfect time to reassess and improve our financial habits. As we welcome not just a new year but a new decade, take the time to take stock of your financial situation and set some goals for the new year. Do you want to have children, retire early or even simply live comfortably in retirement? All these goals take planning to come to fruition- and the earlier you start the better!
According to Moneyhub’s data, the new year is a popular time for individuals to want to take control of their finances:
- Moneyhub saw a 30% increase in sign-ups on New Year’s Day compared to the average number the previous month
- This spike continues throughout the first week of January – on some days double the number of sign-ups of the previous weeks
For those wanting to get their finances in shape in the new year, Samantha Seaton, CEO of Moneyhub has put together her top tips:
Create separate savings pots
Creating separate savings pots will help you prioritise, making sure you have enough money to buy the things that are most important to you. You can create separate savings pots via providers such as Monzo or Starling Bank, or through platforms like Moneyhub.
Save what you can
Many banks now let you round up the cost of each payment and will automatically put the difference into a savings pot for you. Whilst saving the occasional 30p extra doesn’t sound like much on its own, it can quickly accumulate and soon you could be sitting on a good-sized pot of money. If your banking provider doesn’t offer this feature, other money management apps or platforms will do. Whilst it’s best to leave your savings alone so they can accumulate, you could also consider using some to invest in something like cryptocurrency. If you do this well, you could make a big profit on your initial investment and then put that money back into your savings, which is a great way to boost your savings quickly.
Switch where possible
Money-saving apps are a great way to review your finances and determine where you can make some savings. For example, are you on the lowest possible rate with your energy provider or would you be able to switch and save some money? Not only can switching free up money for you in the short term but in the long term, you’ll also notice a big difference. Some apps can notify you if you could be getting a better deal by switching from your current energy, bank or other providers.
Get out of your overdraft
Downloading a money management app will help you better identify where savings can be made. An app will send you personalised financial ‘nudges’ based on your spending behaviour and will flag when you can put money to the side to save. Some apps can even permit you to make an automatic sweep from a savings account into a current account to avoid unnecessary overdraft fees. Having that extra eye on your money is an advantage especially as you start to take control of your finances.
Plan for the long term
Once you feel in control of your everyday finances you can start thinking about your long-term financial health. Putting a little extra into your pension each month can you stand you in good stead for later life, ensuring that you can enjoy a comfortable retirement.
While everyone in full-time employment will be saving into a pension it won’t necessarily be enough. The PLSA’s Retirement Living Standards will help give you an idea of how much you need to save to enjoy the standard of life that you hope to in retirement. Consolidating your pensions into one, and having that goal in mind will help you be more focused on your retirement savings.