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At the end of 2018, a poll established that three quarters of Brits are currently worried about their financial situation. Half of UK adults are financially vulnerable and three million people in the UK are struggling to pay their bills. So, money worries are the Number 1 concern for a lot of people this year. If your top new year’s resolution for 2019 is to get your finances to a better place then there are some very simple ways do it.
Particularly given the current uncertainty over Brexit, putting money aside to create a financial buffer is one of the best ways to improve your financial situation in 2019. Aim to save 5 -10% of your monthly income and by 2020 you could be feeling much more comfortable.
If you’re forgetful when it comes to saving or find it difficult to stick to a budget, automating money management can help you achieve more. There are a number of apps available to help you do this now. Chip, for example, is an app that uses software to work out how much you can afford to save each month and then transfers this into a savings account for you. Even something as simple as setting up standing orders or direct debits can help to ensure all your payments are made on time and no fees are incurred. Automation can also help to ensure you never pay more than you need to. Flipper is an auto energy switching service that continuously switches consumers to ensure they are always getting the best and cheapest energy deals.
Prioritise the debts that have the highest interest rates so that you start paying less for what you’re borrowing. If you can, switch to a credit card or personal loan with a lower rate of interest than what you’re currently paying. 0% deals can be helpful when it comes to clearing bigger balances so shop around for cheaper ways to borrow.
2017 research by Which? found that more than half those surveyed had managed to successfully renegotiate the price of regular household bills such as car insurance, mobile phone tariffs and energy bills. According to the research, it’s possible to save more than £700 by taking another look at what you pay and then haggling with your current providers – or switching – to reduce the cost.
Sometimes it’s the simplest solutions that are the most effective. If you’re not budgeting then you’re not making sense of your money. List your monthly outgoings and what you have coming in every month. Monitor what you spend for a month so that you’re aware of where your income actually goes. Then start making adjustments to reflect your monthly spending goals, one month at a time. If you’re not keen on manual budgeting there are plenty of apps to help with this, including Squirrel.
Once you start budgeting effectively you’ll be able to see where you’re spending the most and where there might be opportunities to save. If you’re really committed to better finances this year, sacrifices may have to be made. Start by eliminating luxuries for a couple of months, reducing your household spend by cutting out meat or alcohol, or giving up the gym membership.
Joining loyalty schemes can help you to accumulate points that you can “spend” instead of the cash that you’re trying to save. Most big retailers offer worthwhile loyalty schemes today. The best way to maximise your returns is to spend consistently with the same brands.
Many regular household bills and payments – such as car insurance – will be set up to auto-renew annually with the same provider. This means that you have zero opportunity to renegotiate and may not even notice that you’ve committed to another year. Uncheck auto-renew on all your regular payments and shop around for the best deals once a year instead.
The human brain is complex but learning to understand how you think about money could transform your finances this year. What are your triggers when it comes to overspending, do you tend to ignore bills and how seriously do you take your money goals? It may be that all you need is to adjust the way that you approach how you handle your money to end up more financially stable.
A little extra income each month can make a big difference to staying on budget and hitting savings goals. Ask for a pay rise at work, sell off unwanted Christmas gifts online or join the gig economy and make a little extra cash from skills such as carpentry or driving. There are lots of ways to generate more cash and your finances will feel the benefit of even a small increase in income.
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read about Alex Hartley