With a new year comes the promise of a fresh, new start. And it’s as good a time as any to create some new financial habits!
We’ve all made a swathe of new year’s resolutions on the first day of January, only for most of them to fall by the wayside come February.
So this year, let’s try something different. Instead of setting well-intentioned but over-ambitious resolutions, let’s get into some good financial habits that are achievable.
Below, we’ve put together our seven top tips to making 2024 your financial year:
Be realistic with your savings goals
Many of us want to save more and a new year is as good a time as any to start. But take it easy. It might be tempting to try and restrict yourself and save as much money as you possibly can, but this won’t work in the long-run.
Crash diets never work and crash saving doesn't either. Worse still, if you've been overly ambitious with your savings and end up having to pull money back just to survive the month, it could affect your confidence and make you feel like you’re bad at managing your money.
Rather, you just need to adjust your targets and you'll be just fine. Start small, build it up and you'll soon figure out a realistic savings goal for yourself.
Get budgeting
If you’ve not got a budget, now is the time to put one together. Having a budget is the foundation of good financial planning, however 39% of UK households do not have one, according to Claro Wellbeing’s Money and Mental Health Project report.
If you’re unsure where to start, try the 50/30/20 rule. Allocate 50% of your income to your needs, such as household bills, rent or your mortgage, 30% for wants, including holidays and dinners out, and 20% for savings or paying off debt.
Stop feeling guilty about spending
The ‘wants’ part of the 50/30/20 rule is really important. People often view budgeting as a purely restrictive process (which doesn’t sound fun), so unsurprisingly they put off doing it entirely.
But building in a specific portion of your income to spend totally freely means that it feels much less painful and keeps you going for longer.
Start a regular review
Reviewing your spend and outgoings isn’t the most exciting activity, but it helps you understand what you’re working with.
side some time each month to look through your transactions and record it on a spreadsheet.
As well as looking out for suspicious payments, you’ll be able to see where your money is going, where you could cut back and how much you could save or invest. Budgets are malleable - use this time to look over your budget and adjust it where you need to.
Introduce friction
Most of us can be a bit too free and easy with our cash sometimes and we often spend money on things we don’t want or need.
This isn’t our fault - studies have shown our brain releases dopamine (the ‘feel good’ hormone) when we shop, which gives us a rush every time we make a purchase.
There are a number of things you can do to add friction to the buying process to try and slow your spend.
Try the three-day rule - every time you want to impulsively treat yourself, wait three days to think it through.
Remove your bank card from the websites you regularly buy from so you have to add it each time you shop. Block notifications and unsubscribe from retailers’ emails and get the contactless feature removed from your card.
Start talking about money
Having open conversations about your finances with friends, partners and colleagues can only be a good thing.
This will help you feel less alone as chances are the people close to you could be going through similar experiences - and you may be able to help each other. Sometimes having someone just listen is enough.
Be kind to yourself
Don't be too harsh on yourself if you don’t immediately master your new financial habits.
Dust yourself off and get right back on the horse. It’s progress, not perfection.
The information provided is financial guidance and should not be considered financial advice.
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