As the New Year unfolds, many seize the opportunity for personal change. While resolutions often include lifestyle adjustments or new hobbies, January is also an ideal time to assess your financial landscape.
Surveys consistently reveal that financial resolutions top the list for many individuals. Recent findings indicate that the average adult plans to spend £4,600 on financial resolutions, encompassing activities like debt repayment and home relocation. While 11% of those under 25 and 15% of those over 55 aim to clear debts and achieve financial stability, a significant 46% express doubts about achieving their financial goals.
While New Year’s resolutions can be challenging to uphold, adopting a few strategies can help set a positive financial tone for the year ahead.
Reflect on the Past
Analyse your spending from the previous year to identify areas for improvement. Scrutinize bills, bank statements, and receipts to uncover unnecessary expenses.
Evaluate Your Current Situation
After assessing your past financial performance, make immediate changes:
- Review direct debits and payments to identify areas for expenditure reduction.
- Sell unused items to generate income without major sacrifices.
- Explore balance transfer credit cards to consolidate debts with favorable interest rates.
- Establish an emergency fund to provide stability during unexpected expenses.
- Take advantage of your pension scheme and revise pension contributions to take advantage of any tax relief you are entitled to.
Implementing these steps can strengthen your financial position, simplify savings, and instill confidence in your financial future.
Set SMART Goals
1. Avoid setting unrealistic goals by adopting SMART criteria:
- Specific: Target specific areas for improvement rather than vague objectives.
- Measurable: Establish benchmarks to track progress.
- Attainable: Set realistic goals to maintain confidence in achieving desired results.
- Relevant: Align goals with your overall financial objectives.
- Time-Sensitive: Define a timeline for achieving goals to pace savings appropriately.
2. Embrace Budget Planning: Budgeting is a powerful tool for regulating spending, monitoring income and expenses, and identifying areas for savings. Follow these steps:
- Gather comprehensive information on your finances to gain a broader perspective.
- Allocate any bonus income wisely, balancing debt repayments, future savings, and present spending.
- Record all expenditures under the new budget for the first month to review and make necessary adjustments.
3. Regularly Review and Update: Revisit and update your savings goals and budget plans regularly to adapt to changes throughout the year
By adopting these strategies, you can navigate the complexities of financial planning and work towards a successful and fulfilling financial year and if you need a hand in planning your finances, make sure you give our team a call to see where we can help.