by Madaline Dunn

As we begin 2023, you’re likely thinking about New Year’s Resolutions; many of us do. The new year feels like a fresh start and a great opportunity to get your ducks in a row. Of course, the last few years have been incredibly difficult for millions of people when it comes to finances, and in the current cost of living crisis and recession, many people are worried about money and looking for ways to improve their finances.

A recent study by LucidTalk, for example, surveyed adults living in Northern Ireland, found that almost half were either worried or anxious about their money situation. Over half of those aged between 18-45 were anxious, and 33% felt angry. These figures are likely similar across the UK.

That said, it’s not always easy to set or keep New Year’s resolutions, and research shows that only one in five can keep to a resolution for one to three months, and only 2% make it the full year. Something that is a key component of maintaining one’s resolutions is ensuring that they’re realistic and manageable; for example, resolving to become a millionaire by year’s end is likely to end in a reasonable amount of disappointment.

Below we’ve outlined some of our top tips for entering the new year with good intentions and maintaining your resolutions.

Be more aware of your spending and take a spending fast

It’s easier to know where you are with your finances if you have it all laid out in front of you. If you can categorise your spending and highlight any unnecessary expenses, or bad spending habits, you’ll likely be more able to make savings.

There are a number of budgeting apps out there that can help you gain more insight into your spending habits, and these include:

  • Emma – which is a good app for helping you identify any subscriptions that you don’t use and are wasteful,
  • Money Dashboard – which can help you budget by planning for future goals and categorises transactions,
  • Chase – which is good for earning interest and gives you a spending overview of your monthly transactions.

Another handy tip to make you more mindful of your spending is to remove your bank details for apps that tend to be a money sucker. Whether Uber Eats or Amazon, adding another layer of admin when making purchasing decisions can help you to stop and think whether or not you really want to buy something, helping to put an end to easy spending.

Confront your debt

Debt can really pull you down and be an incredibly heavy weight to carry, causing stress and anxiety and research shows that being burdened with debt can affect both your mental and physical health. It can also be a scary thing to confront, and many prefer to keep their head in the sand. However, being brave, confronting, and addressing your debt can be transformative and come as a huge relief.

It can be challenging to know where to start, though, so it’s helpful to make a clear, concise list of all that you owe and order it in terms of importance. Our Debt Consolidation Calculator can help you to create this list, and see how much it is costing you in total. Following on from this, creating a personal budget to make dealing with the debt more digestible and easier to take on. It can never hurt to reach out for independent advice as well and set up a talk with your creditors.

Try to improve your credit score

There is a raft of benefits to improving your credit score. Some of these benefits include:

  • You’re more likely to be offered a lower interest rate when borrowing
  • You’re more likely to get approved for credit
  • You’re more likely to be offered a higher credit limit

All of the above can help you achieve some of your wider goals more quickly. So, to boost your credit score, some of the following techniques can be applied:

  • Ensure that you pay on time and stay within your limits,
  • Prove your creditworthiness by taking out a smaller amount of credit,
  • Register to vote.

Undertake a pension health check

Right now, when finances are tight and the cost of living is high, for many people, pensions are the last thing on their minds. Many are now deciding to decrease the amount they pay into their pensions or hit the pause button on pension contributions altogether. This can be tempting, however, experts say that a move like this can be incredibly damaging in the long run and jeopardise your retirement savings.

In the New Year, it can be helpful to do a little health check with your pension and see where you are with your future savings. Through this, you’ll be able to assess past performance, if you’re hitting your goals and whether there are other better pension options on the market.

If you’re not currently saving into a private pension, it could be worth thinking about opening one. Research from Which?, for example, shows that individuals need £19,000 a year to live comfortably in retirement (£28,000 if you are a couple). Likewise, research shows that the minimum required contributions are near the 12% mark to achieve suitable funds in retirement.

Consider switching bank accounts

A study conducted back in 2020 found that nearly half of Brits (40%) stay with one bank for their entire lives. Often it can feel like too much of a palaver to switch, and many also don’t know that there are better deals. You should only stay loyal to a bank if it is serving your interests, and if there’s a bank out there with better deals and perks, why not make the switch? Last year, for example, banks were offering as much as £200 for new customers to switch their accounts.

Make sure you’re up-to-date with the latest personal finance developments

These days, it feels like everything is almost always in flux, especially when it comes to personal finances. The best way to make sure you’re prepared for any changes that may affect your finances is to keep up-to-date with all the latest.

There are upcoming changes to income tax (a freeze in April), potential council tax hikes, and the state pension and benefits are set to rise with inflation. At The Salary Calculator, we’ll help you keep your finger on the pulse with these announcements, so that you can get a better grasp on what you need to do with your money.

Savings

None of the content on this website, including blog posts, comments, or responses to user comments, is offered as financial advice. Figures used are for illustrative purposes only.

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