For many of us, the New Year might mean focusing on our health, our career or our money and it seems that financial resolutions have been particularly popular this year. According to investment website rplan.co.uk, more women than men (59% compared to 50%) planned to cut back on spending and 77% of women will set new financial goals. If you’ve made some money resolutions or if you’re looking for inspiration, read on:
Popular financial resolutions at this time of year often focus on paying off debt or cutting back spending (going on a ‘money diet’) and that’s what this survey found:
1. Cutting back on spending. If you want to succeed at this, it’s no good to just have a vague goal of spending less. It’s much better to set short term and achievable goals (such as spending £20 less a month on sandwiches at lunchtime or spending £50 less a month on going out).
2. Saving more money each month. Look at a couple of price comparison sites to find the best savings account for you, such as Moneyfacts.co.uk, or the Moneyadviceservice.org.uk’s comparison tables and set up a standing order so you pay a regular amount.
3. Reducing your debts. If you have credit card debts and can switch to a 0% balance transfer deal, that will be the cheapest option. Make sure you pay off the debts (if you can) before the 0% term ends. Around 50% of all of those who apply for a credit card are rejected, so if you don’t think you’ll qualify and you have debts charging different rates of interest, pay off the one charging the highest interest rate first. That way your money will work as hard as possible.
4. Looking for a better paid job to boost my income. Getting another job may be the answer but it could be that your existing employer isn’t paying you what you’re worth. If you want to ask for a pay rise, give some examples as to why you deserve it (what you’ve achieved recently, orders you’ve secured etc and what you could earn elsewhere) and keep it businesslike.
5. Getting the best insurance cover. ‘Best’ doesn’t necessarily mean ‘cheapest’. Some insurers are keen to make sure their policies look the cheapest on online comparison sites but either the policy is quite basic or they cherry pick people who are the lowest risk. It’s also worth looking at whether you have enough insurance (such as life insurance cover, if you have a joint mortgage, for example).
6. Cutting down on insurance costs. If you’re shopping around for insurance, be very careful about any assumptions that are made about you, such as how high an excess you’ll pay.
Shop around to reduce financial charges
7. Shopping around financial providers to reduce charges. It’s definitely worth looking at what you’re being charged in interest by your credit card if you don’t pay it off in full every month and at how much you’re paying in bank charges. But don’t apply for lots of loans or credit card accounts if you’ve been turned down by one provider as this will count against you.
8. Starting to sort out or improve your pension. With the stock market falling and many companies closing their final salary pension schemes, it’s easy to think that pensions are a waste of time. But if you’ve not started your pension or don’t pay much into it, you need to ask yourself ‘what will I live on when I retire?’.
9. Taking more control over your investment decisions. If you have money in a workplace pension that’s not a final salary scheme, do you know where it’s invested? And if you have other investments, such as stocks and shares ISAs, make sure you don’t follow the herd. Often, funds are flavour of the month one moment and yesterday’s news the next.
10. Changing your bank account. Changing your bank account should be straightforward – in theory. But there can be problems if direct debits or standing orders aren’t transferred. The rules will change from 2013 so that the bank you’re switching to will have responsibility to make sure the whole process works smoothly from start to finish.