New Year resolutions to boost your bank balance
FINANCIAL EXPERT WARREN SHUTE, AUTHOR OF THE MONEY PLAN, TELLS YOU HOW TO GET YOUR FINANCES IN SHAPE FOR 2019
IT’S a New Year, and I bet that for most of you it’s not only your head hurting! Your wallet has probably taken a beating too.
My message to you is – don’t panic. I am going to show you how you can make some quick wins to help not just for now but for the rest of the year.
To avoid the January financial blues I am going to ask you to get financially organised using what I refer to as my Bank Account System, as well as giving you some ‘quick win’ money resolutions.
My BAS is a system that automates your money as much as possible, taking emotion out of everyday financial decisions and giving you control over your yearly spending.
HERE’S HOW IT WORKS:
■ Set up two accounts: One for bills, one for personal spending. ARRANGE all your regular payments, standing orders and direct debits to come out of your bills account – which is also where you keep your incoming money.
Go through each payment and ask yourself three things: do I need this, do I want this, can I get it cheaper elsewhere?
Act accordingly; you might be surprised at how much you can save.
■ Put some WAM into your life! WAM is your weekly Walkabout Money, and it pays for all your variable spending and fun: beer, coffee, haircuts and so on.
Work out how much you want (or have) to spend in a month after your outgoings, divide it by four, and you’ll get your weekly WAM.
■ Set up a weekly payment for this amount from your bills account to your WAM account. Make it happen on a Wednesday, because once it’s spent, you don’t have too long to wait after the weekend, which is when most of us spend our cash.
■ Your WAM is your weekly allowance; it’s finite. DON’T dip into your bills account for more, or use credit cards if it runs out, it’s not too long to wait for the next Wednesday!
THE QUICK WINS:
■ Sell unwanted Christmas presents GO through your house and gather together all of the presents you don’t want. Search online to see what you may expect to sell them for. Two good sites are ebay.co.uk and Facebook Market.
■ Do you really need that gym membership?
“NEW YEAR A New Healthy You” – time to make the resolution to go to that expensive gym. But think before you sign lengthy contracts and read the small print.
Are you really going to go? Are there other ways of keeping fit that are cheaper and don’t involve contracts?
■ Set five specific money goals for 2019 IDENTIFY five financial feasible goals that you want to achieve in the New Year, and write them down. Writing down and clarifying your goals will motivate you to take the steps to achieve them.
Be specific. Avoid vague resolutions like ‘pay off debt’ or ‘spend less money’.
■ Lunch at work – SAVE £880 p.a* IF you spend an average of £4 a day on a Prêt lunch, you would be spending approximately £880 a year. Resolution – make lunch at home
■ Stop one bad habit – Starbucks on way to work – SAVE £605 p.a* THINK of one habit you need to break that won’t break you. If you buy a latte at Starbucks on the way to work each day you could be looking at spending £605 a year. Resolution – take your own coffee to work in a flask.
■ Claim the Married Couples’ Allowance
MARRIAGE Allowance lets you transfer £1,190 of your personal allowance to your husband, wife or civil partner – if you are a non-tax payer and they are a basic rate taxpayer. This can save you £238 a year in tax (April 6 to April 5 the next year).
■ Save more, spend less
MAKE your top New Year’s resolution to save more and spend less. A great way to achieve this goal is to set a weekly allowance and stick to it. To avoid overspending on your everyday expenses, pay yourself a weekly allowance for all your variable expenses, and once it’s gone, it’s gone.
■ Dry January – Save £787 a year CUTTING out booze for January is becoming normal, and can save a few quid.
But cutting it out for a full year can save far more. Figures from Macmillan Cancer Support show that the average Brit spends £787 a year on alcoholic drinks – enough for a new iPhone, Mulberry tote bag, or a top football club season ticket – with 1.3 million spending more than £2,650 a year.
■ Shop smart and get paid for what you buy
REMEMBER the cash back sites. Both topcashback.co.uk and quidco.co.uk offer you cash back on certain purchases. It’s definitely worth a search as the pounds can add up quickly.
■ Get the best prices online
Let sites like idealo.co.uk search the internet to find you the best price for goods you buy online.
■ Keep a slush fund
SOMETHING – be it a car repair, an emergency root canal, or a job layoff – always comes up to throw you off your monthly budget. To keep these incidents from running you into debt, you need to have an emergency stash in a savings account.
I like to use Premium Bonds because it keeps the money out of easy access but can be called on for an emergency. If you have debt, save £1000, if you’re debt free, save 3-12 months of your expenditure.
■ Debt-free
SET yourself a goal to repay your credit cards in 2019.
Switch them to interest-free and make regular overpayments starting with the smallest balance and follow my snowball debt repayment system – you can repay your debt in 2019.
■ Cook more or learn to cook – SAVE £1,980 per year
FOR many, eating out has become the norm, with fast food restaurants littering what used to be the high street. But get to know your kitchen, and you’ll save money.
According to the Office of National Statistics, UK households spent more than £45 a week on eating at restaurants, fast food joints and the like.
You’re going to spend less money the more you eat food from the supermarket, and it will be healthier for you, too.
■ Work pension
MAKE sure you join your work pension in 2019, it’s likely your employer will pay in and if you don’t you’re giving away all this money – it’s never going to be the right time, so join it now.
■ Make money doing what you love
MOST people can name at least one thing they are truly passionate about.
Find a way to turn your passions and hobbies into profit. The world is full of amazing jobs from full-time ice cream tasters to video game testers! *Based on 20 days a month and 11 months a year
■ Warren Shute is the author of the bestselling personal finance book The Money Plan, available on Amazon for £11.79.
■ Alternatively there are free planning and budgeting tools at warrenshute.com