Eight resolutions for personal finance fitness

1. Get a handle on your budget.

If money is tight, getting a handle on your budget is vital. If you’re not the sort of person to use a spreadsheet then you could simply go through your bank account, collect receipts or note expenses in a notebook or app. Reflect on this on a daily, weekly and monthly basis. For those with plenty of money this can be even more revealing as many people who are comfortably off tell me they don’t know where their money goes.

2. Tidy up your finances.

Over time it is easy to accumulate lots of savings accounts and credit cards: perhaps you took them out to take advantage of a good interest rate, or save for a particular purpose, or you might simply have lots of different credit cards. Not only does this often result in lots of post and admin, it could leave you more vulnerable to fraud. Take stock of exactly what you’ve got and what you need.

4. Make a debt repayment plan.

It makes sense to tackle debts with the highest interest rates first. It may be worth considering trying to consolidate loans or credit cards and look for low or 0 percent balances.

5. Boost your cash savings.

Aiming to keep three to six months of spending money in cash as an emergency fund is a good guideline. However, the level you keep will really depend on your personal circumstances. If you are self-employed or running your own company and have dependents then you may want a larger amount of cash as a safety net than if you are single and in secure employment.

6. Consider investing once cash savings are in place.

Due to inflation, the value of cash savings will erode over time. Once you’ve got your cash savings in place, you may want to think about investing for the chance to obtain higher returns than those offered by cash, although investing comes with the risk that you may not get back the originally amount invested.

7. Maximise your pension contributions.

If you are in a company pension scheme, consider if you are making the right level of contributions.

8. Get the most out of any employee benefits.

Most employers have a window where you can make changes to your benefit choices, often this is in the spring. Check what date yours changes and make time to review what is on offer and what works for you. | Supplied by Schroder Investment Management

MANY PEOPLE embark on diets or exercise regimes in January. They start with lots of enthusiasm, but then quickly give up. Shaping up your finances is a similar challenge: it is about making it a habit and continuing throughout the year. Claire Walsh, a personal finance director at Schroders, has eight resolutions that could help to improve your financial health:3. Check your credit score. This is vital when you want to take out more credit, such as a loan or mortgage, but it can also affect some contracts such as mobile phones.