In just the same way you feel the need to detox and recharge your physical batteries in January, it’s also a great time to have a fiscal detox, too. In just the same way you feel the need to detox and recharge your physical batteries in January, it’s also a great time to have a fiscal detox, too.
You know, get to grips with those pesky cash issues that always leave you in the red, worried about debt and wondering you will ever have a healthy relationship with money.
Here are some small changes that will help get you and your bank balance on the right road.
1. Remember that you can start small
Just one change a month can be the start of big savings. Small actions really can make a big difference. Even if cash is super-tight every month, there is still something you can do to start to change your financial future. Take a look at your daily lunch spend, your coffee purchases, your Uber receipts. They all may seem inconsequential day to day, but over a period of time they have an impact. Try taking your own coffee and lunch to work. Even a £2.50 meal deal a day is a saving of £50 a month - that’s £600 a year.
2. Take a money moment
No-one wants to start the new year staring at a table full of credit card and bank statements, but knowing where you are and where you want to be is a good starting point. Hiding from money worries only makes you feel less in control of what can already feel like a stressful situation. You can improve your situation, you just need to be determined to do it.
3. Stop making impulse purchases
Online shopping is a killer here, one swipe on your phone and ‘hey presto’ those sale boots are winging their way to your front door. Feel free to browse by all means, but beware the ‘click to buy’ option. Step away from seamless purchasing so you have to make an effort to buy anything. Take a minute to really think about it and let your head (and not your heart) make the purchase.
4. Ditch the credit habit
It’s not a bad idea to use a credit card for purchases over £100 as it can often give you added protection. But the only ‘good’ way to use credit cards is to have a direct debit set up to pay off the full amount every month. Not clearing the rest regularly costs you money and is a sure-fire way to get stuck with long term debt. If you already have some debts, look to clear it before anything else. It’s almost always better to get rid of your debts before saving as the interest rates are much greater with credit.
5. Check your statements for forgotten subscriptions
It happens to the best of us. Forgetting to cancel a free subscription trial or accidentally paying for multiple streaming services that basically do the same thing. Make sure to take a look through a few months-worth of bank statements and see if any of these ‘ghost’ payments crop up. It will be annoying to find the long list of £7.99 payments for stuff you didn’t use, but at least it’s stopped now.
6. Set yourself a monthly budget (and stick to it)
This seems obvious. But with the increase of contactless payments and online shopping, it can be much harder to keep a monthly budget. If you are using these digital payments, then you should also be happy using mobile or online banking to stay on top of your finances. Make sure you don’t just look at the big number at the top (what’s left), but also check how much you’ve already spent.
7. Don’t just bury your head in the sand
It’s easy to grab all your finance documents and shove them in a drawer and assume everything is OK. If you are tempted to do that, then that’s a pretty sure sign that everything probably isn’t perfect. If you want to start getting on top of your finances, you will need to grin and bear the process of finding out where your money is going and the small steps you can make to get there. You’ll be relieved once it’s done and you can start doing something about it.
8. Make sure you have an emergency fund
It might not be the first thing that comes to mind if you’re struggling to make ends meet every month. But what if you lost your job tomorrow? Do you have enough to live on for 3 months? That’s the base emergency you should ideally have. Saving just £25 a month can quickly get you to that point.
9. Think like a millionaire
Finally start selling those craft earrings you love making or start teaching skills online. You don’t need to become a multinational company. Start small and keep learning, you’ll get there if you keep a growth mindset and start today. Crucially, don’t put in money that you can’t afford to lose, just in case it doesn’t all go to plan.
10. Get your pension in order
Not got a pension? Or got loads of little ones and not sure what to do? Join the gang. It’s never too late to start making changes to your financial future - no matter what stage you are in life. Speak to a registered expert that can give you all the information you need and even guide you through what you need to do. If you don’t know what to do, there’s always someone to help.
11. Stay out of the red
Overdrafts are a false economy. If you’re living in your overdraft or relying on it to live, you’re living in a false sense of wealth. It’s a common thing for people to do, but it’s continually chipping away at your earnings and your financial confidence. Avoid these short-term cash injections and make little savings to gradually get you out of the red and into the black.
12. Make sure you are FSCS protected
Take some time to check that all the financial firms you use are FCA registered and protected by the Financial Services Compensation Scheme (FSCS). FSCS protection is a free service that will compensate you if a financial product or company you have investments with goes bust.
From your savings to your mortgage and from your pension to your investments. It’s an essential precaution and one you need to look at. Essentially, if the company you use goes bust, the FSCS may be able to compensate you for any loss if the firm is registered. If it’s not, then they can’t help. Not all companies or products are protected. For example, payday loans, Christmas Clubs and peer to peer lenders aren’t covered.
Set up by Government, it’s impartial and independent. If you do need to make a compensation claim, it’s easy to do online, and there is live chat and a telephone number if you need to speak to someone.
For more information on FSCS and the different financial products they help protect, you can visit their website at www.fscs.org.uk.