Ease the strain on finances in 2020
AS THE seasonal splurge draws to a close, most people will be going flat out to convince themselves that next year they will eat better, sleep better, and be better people – as we always do.
New Year financial resolutions are notoriously short-lived, but you owe it to yourself to get your finances in shape, even if your waistline refuses to respond to your good intentions.
The following tips should ease the pressure on your wallet, even if everything else is feeling squeezed.
SHRINK THAT DEBT
Debt is a four-letter word, and one that will leave growing numbers of us cursing as the festive bills roll in.
Two thirds of Britons will clear their Christmas debts within three months, but one in 10 will take six months or more, according to research from Ferratum Group.
We may not have had a white Christmas but you should start “snowballing” in the New Year, which means paying off your most expensive debt first, then moving onto the next most expensive.
If your debts are running out of control, contact a free advice service such as Citizens Advice Bureau, Stepchange or National Debtline, while avoiding commercial operations that charge fees.
PLAY CARDS RIGHT
John Crossley, head of money at Comparethemarket.com, said overdrafts, credit card and store cards are expensive ways to borrow, but there are alternatives: “Many credit cards have zero per cent APR introductory offers, either on new purchases or balance transfers.”
These can help you clear your debt without racking up costly interest, but remember to pay off everything before the introductory period ends. Crossley added: “At this point you will be automatically rolled onto a higher interest rate, typically around 20 per cent.”
DRAW UP A BUDGET
If you feel like money has been running through your fingers, it may be time to draw up a budget, to see where all your cash is ending up.
Start by listing all your essential expenses such as rent or mortgage payments, utility bills, council tax and basic food bills, that have to be paid regardless.
Then, work through your current account and credit card statements to identify subscriptions, direct debits, memberships and standing orders you no longer use, and other ways you may be throwing money away.
Ed Monk, associate director at Fidelity Personal Investing, said technology can come to your aid: “Budgeting apps with itemised statements from online banks like Monzo and Starling can help nudge you to cut your spending.”
GET HEALTHY
Smoking, drinking too much and blowing money on takeaways can all wreak havoc on your financial health.
The average smoker on 10 cigarettes a day spends more than £100,000 on cigarettes during their life. If they invested that money they would be £500,000 better off by age 75, according to personal finance site Nimblefins.co.uk.
KEEP CASH TO HAND
Everybody should have a “rainy day” pot of cash for emergencies, enough to cover three to six months of bills.
This should be held in an easy access savings account or cash Isa, so you can get at it in a hurry.
Moneyfacts.co.uk finance analyst, Rachel Springall, said savings rates remain poor, but do not give up: “For larger sums, it is still worth checking whether you are getting the best rates on your savings, and move on if not.”
THINK LONG-TERM
The stock market will generate a higher return than cash in the long run, but with greater short-term volatility.
Damien Fahy, founder of website Moneytothemasses.com, said now is a good time to check your investments are in the right place and reflect your attitude to risk: “As you grow older, you will typically want to take fewer chances.”
COMPARE RATES
Dig out all your regular household bills, including those for your gas and electricity, landline, mobile, broadband and any digital TV subscription. Do the same with your car, household and travel insurance policies, then hit the comparison sites to see what is out there.
Energy customers saved a staggering £1.7 billion in 2019 by switching suppliers, on average £283 for every household that switched, uswitch.com calculates. Energy expert Rick Smith said: “Comparing rates across all your home services can give you more competitive deals and better customer service.”
‘Budgeting apps with itemised statements can help nudge you to cut your spending’
UPDATE YOUR WILL
Just half of all UK adults have written a will, and many of those may be out of date.without one, you could leave your family a nasty legacy, now could be a good time to contact a solicitor.
Jon Jacques, chairman of Will Aid, said many wrongly assume that if they die “intestate”, without a valid will, their relatives decide how their assets are split.
In practice, the estate must be shared according to intestacy rules. “Your wealth could go to people you did not intend, while your family and loved ones go without,” he said.