Turning Your Finances Around In 2020
What were your financial goals this year? Had you planned to save more? Pay off your debts? Start investing?
Financial goals can be tough to stick to, and like many New Year’s resolutions, they can soon tail off into a distant memory. But the key to sticking to any goal is having a plan, and if you can take things step by step, you could be in a very different situation by this time next year.
Are you ready to make 2020 the year you turn your money situation around for good? Take a look at the following tips for improving your finances throughout the year.
Set yourself some realistic goals
It’s all well and good to say your New Year’s resolution is to ‘be better with money’, but what does that mean to you in reality? Setting financial goals involves setting targets and milestones that are relevant to you. This could include paying off a credit card or reaching a certain savings target. Using the SMART goal method, you can set money goals that are Specific, Measurable, Achievable, Relevant, and Timely. Try not to set yourself goals that are unrealistic or too difficult – this will make you more likely to fail. It can help to set yourself some smaller targets that you can tick off throughout the year, helping you stay on track and keep motivated.
Get a clear picture of your financial situation
Do you know how much debt you owe or what your monthly outgoings are? If you’re not clear on your financial situation, it’s time to change that.
Understanding your finances is the first step to improving them. You need to know exactly how much money is coming in, and how much is going out. This can help you make some easy decisions about where to cut spending, as well as understand more about what you need to work towards.
Spend time going through your accounts and statements, it will help you give you a great starting point and some figures to improve upon by the end of the year.
Budget for the year
The next step towards improving your finances is to budget for the year. Most people budget from month to month, but if you know how much money is coming in, it could make sense to budget for the whole year – especially if you’re usually caught short with things like Christmas or birthdays.
You can use a budget planner to help you set your monthly budget, and then adjust your budget for the year. By thinking carefully about what you have coming up, you can make sure you start saving in advance, and won’t be caught short when those unexpected moments happen. This way, when it comes to holidays, weddings and other special occasions – you’ll already be covered.
Don’t forget to set some of your budget aside for emergencies. If you don’t use it, you’ll have a nice pot to add to your savings or to treat yourself at the end of the year.
Start making cuts
Working out your outgoings gives you the perfect opportunity to see where cuts can happen. Take your utilities for example. Have you ever tried switching providers? Haggling with suppliers can help make sure you get the best deal, and could save you £100s over the course of the year. Even if you can’t get a better deal, it’s always worth asking. Start by going through all of year service providers and make comparison deals, then get on the phone to start negotiations. Sky and mobile phone providers can be excellent places to start saving money.
As well as cutting your essential expenses, think about the other expenses you can get rid of. Are you making the most of your gym membership or Netflix account? If there are services you’re barely using and could go without, get rid of them. You’ll free up some money that can go straight into your savings.
Change your bank
Have you been with the same bank for as long as you can remember? Then perhaps it’s time to make the switch. Switching banks often comes with a cash incentive, which can be a great way to start fresh with a new bank.
As well as your traditional high street banks, you might want to consider using an online bank instead. Providers such as Monzo and Starling provide smart banking services with a lot of benefits, including ways to manage your budget easier. If you barely go into your bank anyway, then a move to an online bank could be a great move for your finances.
Take the right approach to clearing debt
Do you have debts to clear in 2020? Then making a plan on how you’re going to do that will put you in a great financial position by the end of the year. The snowball method is used by many people to tackle their debts, by working on the smallest debts to free up more money to pay off the biggest debts. By clearing those smaller debts first, you’ll be hitting milestones that give you the motivation to continue to pay off your remaining balances.
If you’re struggling with debt and can’t see a way out, then it’s time to get some help. Companies such as Stepchange can help you put together a debt management plan to reduce the interest you’re paying and clear your debts faster. Dealing with debt can be stressful, so do something about it to take the weight off your shoulders.
Look at ways to earn more money
If your finances are stretched to the limit, then you could always look at ways of earning more money. Side hustles are great for boosting your income, and can even lead to full-time careers. From starting a blog to setting up your own business, you could be surprised at the possibilities that come with a second job or pursuing your hobby. Could a side hustle make your entrepreneurial dreams a reality? It’s certainly worth exploring to find out!
Change your home habits
One way you can turn your finances around is to change your habits at home. If you used less energy, you could easily reduce your bills as well as reduce the impact on the environment. Putting the heating on for an hour less each day, or turning off your appliances can soon turn into big savings over time.
The good news is that it’s easier than ever to cut your energy use. From getting a smart meter to using a smart home system, you can make some significant savings each month. Did you know that dimming the lights uses less energy? It’s those little things that will make a difference to your spending.
You can also change your approach to waste. More and more people are embracing sustainable living, and making the most of what they’ve got instead of buying new again. If you have furniture that is looking a bit dull or dated, consider repairing or refreshing it instead of buying new. You could even take the same approach to your clothes!
Spend less money on food
We need food to survive, but most of us are guilty of spending more than we need to on food. From overspending on the grocery shop to eating too many takeaways, it’s a habit you can learn to break out of in 2020.
Start with your grocery shop. There are several ways you can learn to spend less on your weekly shop. Doing your shop online is one way, as it will help you stick to a certain limit, as well as browse offers and discounts easily. If you cut £10 off your shop each week, that will give you an extra £520 in savings by the end of the year. Start meal planning and only buying what you need – don’t be tempted by the offers that can end up going to waste in your cupboards or fridge.
Take the same approach to eating out. If you can get food for less, why wouldn’t you do it? There are plenty of websites that offer discount codes on dining out, so make sure you take advantage of them.
Save wherever possible
They say that every penny counts, and that’s especially true of your savings. Each time you save money, put it to one side. If you manage to get a great discount code or an offer, why not put the difference away so that you can’t touch it? These easy ways of saving money can soon add up, helping you build a much healthier savings pot.
A new year means a fresh start, so what better time to take charge of your finances? Get yourself in the right mind frame to make some changes, and you could soon reach your financial goals. Want to get debt free in 2020 or have some savings in the bank? Make your resolutions financial ones and start seeing big changes to how you manage your money.