Published: 01/02/2021
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As the new year moves on, now’s the time for sorting out your personal finances and boosting your savings. It’s not just about spending less money, but not wasting money. To sort out your savings, you need to think carefully when spending money. This is a real turning point, because you’ll value things much more when you see the worth in them.
Use the 30-day rule This is easy! Before you buy something, wait 30 days to stop expensive impulse purchase decisions. It gives you time to properly consider, especially online, if you really do want the things you would normally click to buy without much thought. Probably, once the 30-day period has passed it’s unlikely you’ll still be as inclined.
Pay yourself first using standing orders to savings and investments so this is automated before you are tempted to spend it on other things throughout the month. Next you pay your bills and can take out some spending and fun money if there’s enough left over.
If your salary increases don’t just spend more based on the gross increase! Be sure to spend less than you earn, otherwise you’ll end up borrowing again! Don’t be tempted to splash out with your extra money by buying a bigger house or nicer car. This can lead to over-spending. Think about spending on experiences that can really enrich your life, rather than more ‘stuff’.
Set your goals of where you want to be in five or ten years’ time so you know what you have to do to achieve your goal, keeping you on track with your savings. A clear goal will help keep your motivation to save going strong.
Financially educate yourself. Informative podcasts from the BBC Moneybox programme can boost your financial understanding, helping you to adopt a healthy money mindset. Socialising with others with similar goals can also help you develop and keep you on track.
If possible, have more than one income stream. Don’t put all your eggs in one basket. 2020 has shown, things can change very quickly. Losing your job could leave you in a precarious position.
Understand the difference between assets and liabilities. This can help stop debts accumulating. Liabilities can be a house that you have a mortgage on, or a car that needs a lot of money spent on it, whereas assets like savings or cash will keep money in your pocket, and not take it out.
Cut back on fast fashion and shop second-hand which can be a sustainable way of saving money as well as reducing worldwide waste and can help the environment too.
Moving to other providers can save you lots of money so, make sure you have the best deals and don’t just let your insurance roll over each year because you don’t get round to seeking out the best offers. Loyalty often doesn’t pay off. Comparison websites such as Which and utility auto switch sites such as Look after my bills help you search out the best deals.
Build an emergency fund. If this year has taught us anything it’s that an emergency can strike at any time, so make sure you have as much salary saved up as possible in case you lose your job, fall ill or are unable to work.
True measures are health, love, quality of life and other non-physical things so, most importantly, don’t equate your success with material possessions. Once you are more in control of your finances you will have a lot less stress and worry. You’ll never regret being good with money, but you will regret letting bad money decisions rule you.