With January well and truly underway, there’s a good chance you will be making and trying to stick to some ambitious New Year’s resolutions. While many Brits who make resolutions focus on losing weight (48%) and improving fitness (41%), 32% of people aim to save more money over the coming year, according to a survey from YouGov.
After the spending season of Christmas, it’s understandable if you find yourself feeling the pinch in January, but it’s important that you know that it’s still possible to achieve financial wellbeing over the next 12 months if you make some smart choices. With this in mind, let’s take a look at five of the best ways to build your funds in 2018.
January can be a tough month financially, especially if you’ve taken on additional debt to cover the costs of Christmas. In fact, around 7.9 million Britons have said that they’re likely to fall behind on their finances in January 2018, which is a worrying 16% of the population (National Debt Helpline).
If you know that you’ve built up some debt through credit cards or loans, it’s important that you don’t bury your head in the sand and, instead, plan ahead. Begin repaying what you owe sooner to avoid high levels of interest creeping up through the year and setting you back for the future.
After you’ve worked out how much you need to cover your essentials each month, channel any free cash into paying back your debt, rather than spending it on non-essential expenses. This way, you can get debt free quicker and ensure your credit score doesn’t take a beating.
Life can often be unpredictable, serving up financial problems that can threaten your security. To ensure you’re able to weather any emergency and give yourself a safety net, it can be very beneficial to begin putting savings into an emergency fund to ensure your continued wellbeing.
However, if you have additional financial demands to keep up with, it can often prove difficult to regularly add to any savings. Only 30% of the UK population have more than a month’s salary kept aside in savings, according to a survey by Paymentsense, which shows the extent of the problem.
As we’ve mentioned, paying your debts should take priority when it comes to your free funds, but it is still possible to start adding to a rainy-day fund, even if it’s through micro-payments. Chip is a useful app that uses a tried and tested algorithm to work out how much you can afford to put away on a regular basis. Small savings are made automatically, and you can slowly build up an account.
In late 2017, the Bank of England announced the first increase to its base interest rate in a decade, moving from 0.25% to 0.5%. If you’ve got a mortgage with a standard variable, tracker, or discount rate, or your fixed-term period is coming to an end, this rise could increase how much you pay each month through 2018 and beyond.
According to this article by The Mortgage Genie, one of the best ways of addressing this issue and keeping repayments affordable is by remortgaging your home and switching to a better rate. They also point out that the interest rate rise could be good for savers earning a higher level of interest, so any savings you start to make this year can benefit.
If you just don’t have a knack for numbers and you struggle to sit down with a calculator and work out your monthly budget, trying to achieve security can be a challenge. Plus, financial wellbeing is about more than just the figures: it’s about having the peace of mind that you’re in control and know where your money is coming from and going to, which can be hard to track.
Thankfully, you can streamline the whole process by using a dashboard app, like Money Dashboard or OnTrees, which allows you to clearly see your incomings and outgoings in an easily digestible, colour-coded format. This way, the hard work is already done, and you will be able to plan for the future without the headache of having a jumble of calculations to consider.
You may have heard the “switch and you could save…” line many times before when it comes to your utility bills, and you may have even written the whole process off as too much hassle. However, with energy in greater demand, and providers across the market announcing rate increases in 2017, switching is becoming a very nifty way to save money and boost wellbeing.
For example, according to Ofgem’s State of the Market Report 2017, around 60% of energy customers in the UK were on their provider’s standard variable rate, and this is generally more expensive than fixed tariffs. This means that, on average, a household is typically overpaying their energy bills by around £300 per year. By willing to switch rate or provider, you could get access to a lower tariff to suit your needs, and really begin to save in the future.
If you’re looking for even more evidence, the Guardian investigated how much typical customers with various suppliers could save by switching, and found that in each case there was a substantial amount that could be cut from the bill.
Take all five of our tips on board and you can take big steps towards the financial wellbeing you’re aiming for in 2018. Once you’ve achieved this, you can look forward to a much more comfortable future beyond the year’s end.
Publishers of Staffordshire Living Magazine