Many of us start the new year with the commendable intention of getting better with money.
But, as with all resolutions, we’re vulnerable to failure unless we make concrete changes early on that are easy to stick to.
So, while your motivation is at its highest, here are some healthy habits you can establish now that will help to keep you on track throughout the next 12 months – and hopefully beyond.
Consistency is the key to hitting your savings goals, so don’t rely on your willpower and memory to keep you committed. Once you’ve identified what you’re saving for and how much you need to save, arrange an automated monthly transfer from your current account to a separate savings account.
It’s best to schedule this soon after you get paid (assuming you receive a monthly salary).
This ensures that the transfer won’t push you into your overdraft and removes the temptation to spend it rather than save it.
It’s fine to start small, too! The best rates on offer right now can be found here.
It’s no good saving consistently every month if you’re also sporadically dipping in for discretionary purchases.
If you’re guilty of this, perhaps you need to introduce new barriers to make accessing your savings more difficult.
Many savings accounts only allow you to make a limited number of withdrawals within a year. Others pay a lower interest rate in the months that you make a withdrawal than in the months you don’t.
Decide what will work best for you, then sign up for a suitable account.
A piece of money advice you might have heard before is to give every pound a job.
This means assigning each pound or penny of income to a specific bill, debt repayment, or savings goal, so there’s no uncertainty around how you’ll use it.
Many accounts from newer banks make this easy by splitting your balance between multiple pots (also known as spaces or vaults). You can even have specific direct debits tied to specific pots.
You might find it useful to have a pot of “fun” money as well as pots for bills and savings goals. This relieves the mental load of deciding whether you can afford to indulge in a non-essential purchase or experience, as it becomes a simple matter of whether there’s money in the pot.
If you tend to run out of money every month before payday arrives, but you’re not sure where it’s all going, precisely tracking your spending will give you a needed reality check.
While it’s possible to do this yourself by recording outgoing payments in a spreadsheet (or even with pen and paper), this is a laborious task you might lose energy for by February.