‘New Year, New Start’. Spare us the cliches, right? Chances are that after a year that many of us would rather forget, the last thing you’ll want to do is to look too closely at the state of your finances.
But if you can summon up the motivation, there are plenty of rewards. After all, whether we like it or not, a new year is here, and one which, if we are lucky, may see the return of holidays abroad, sunny summer evenings down the pub, birthdays, nights out and family days out.
You’ll want to be ready when all the fun begins, right? Of course you do. So if there was ever a time to sort your finances and stare down your online banking, it’s now.
So let’s get started with three basic steps that will help give you more control over your money in 2018.
Put together a monthly budget
It’s up to you how much you geek out over this. Use Excel if that’s your thing, download an app, or grab some old fashioned pen and paper. The key thing is doing it.
No need to overcomplicate things:
- Start by putting together two lists. One listing all your income (that’s money coming in each month), and one listing all your expenses.
- Then with expenses, note next to each one if it is:
- Fixed (things like your rent, that have to be paid no matter what)
- Optional (things like your Netflix subscription, which aren’t strictly essential)
- Add up all your income. Then, add up all your expenses.
- Subtract your expenses from your income, and you’ll be able to see clearly how much money you have left over each month, or if you are overspending.
Review your credit
Needless to say, repaying your credit card bill or keeping up with loan repayments is a ‘Fixed’ expenditure. You really don’t want to miss it out.
Checking your credit file is a great way to remind yourself about what you currently owe money on, as well as flagging up anything on your file which is incorrect. More about checking your credit file
Once you have your credit report, you can now prioritise what to pay off. A good way to tackle this is to start with the lowest balance, and get that paid off first. It’s worth giving your credit report some quality time, as your credit file can affect how much interest you pay and the amount you can borrow.
Cut back where you can
In the first step, you separated your optional expenses from your fixed expenses. You should be able to use this to identify areas where you can cut back and save money, if you’re a little bit creative and ruthless.
- For Fixed Expenses — think about whether you can get a better deal, such as by switching energy providers or changing your mobile phone contract.
- Optional Expenses— think about whether you really need it. A good way to think about this is whether you would prefer to have it, or the extra money you could save without it.