Your financial fresh start

New year, new finances - how to make a fresh start with your money

The new year naturally signifies a fresh start, leaving behind the old and looking forward to the opportunities and mysteries of 2019. It’s also the perfect time to look at your finances and take stock of how you can make the most of your money.

Think back - what are your main money lessons from 2018?

It's fair to say that every year begins with good intentions, but as time goes on and life inevitably happens, it can be easy to let things slip and go back on your financial resolutions "here and there".

By taking stock and thinking about things you were happy about during the past year and what you’d change if you had the chance, you can motivate yourself to stick to your guns.

For example, did you set yourself saving goals but found yourself dipping into your rainy day pot anyway? That may mean you need to set yourself more realistic savings goals, or perhaps be a little stricter when that temptation comes at the end of the month.

Revise your household budget (or create one!)

Ambitious money goals are all very well, but you’ll find it nigh on impossible if you don’t know what your starting point is – how much is coming in each month, how much of that is spent and what could be saved

A budget is a sure way to know where you stand, so from there you can make more informed money decisions.

Some people prefer to do it old school, with a spreadsheet that they fill in manually with all of their incomings and outgoings, while others prefer to use any of the range of budgeting apps out there.

Whichever option you choose, you may be surprised by where your money goes.

Automate your savings

Conventional wisdom states that it’s a good idea to save 15% of your gross annual income every year. However, for most of us it’s about making small, manageable increases - even £20 extra a month is a start.

The key to saving effectively is to take it out of your hands.

That means opening a separate savings account and setting up a standing order to leave your account just after you get paid each month. This means you effectively never see that money and see whatever remains in your current account as your "actual" income.

It's kind of like paying your future self and family and, over time, you can increase the payment.

Know your credit score

Having an idea of your credit score is so important - a good one can help you get preferential deals on everything from credit cards to mortgages.

A commonly held myth about credit cards is that it’s best to avoid using them in order to prevent yourself from getting into bad credit. In actual fact, the best thing to do is to use credit responsibly (which we’ll get into a little more below).

This proves to banks and lenders that you can be trusted to make the required payments in full and on time. The first step, though, is to use a free service to check what your credit score looks like at the moment.

A good credit score can help you get preferential deals

Do an insurance review

Insurance is one of those things that you don’t really think about until you need it most but, by then, it’s often too late.

The new year is a good cue to review all of your active policies and ask yourself two questions:

  1. Do these give me the protection I need?
  2. Are there any other policies I might need?
This is especially important if you’ve recently had a big life change. For example, if you’ve bought a new house, do you have the right buildings and contents insurance? If you’ve recently had children, is your life insurance policy enough to provide for your family if the worst happened? Have the kids flown the nest and need contents insurance at uni?

Thinking of worst case scenarios may seem morbid, but it’s necessary to ensure peace of mind for yourself and your family.

We offer a range of insurance products to cover you in many stages of life – find out about how we can help here.

Look at your pension

Retirement may seem a long way away, but as the majority of the population is now auto-enrolled onto a pension, it pays to take a minute to think about how much you’re contributing to it.

Many employers will match the amount you contribute up to a certain percentage of your wages. It’s well worth considering paying this amount or more, so that your employer is depositing the maximum amount each month.

After all, it’s effectively free money.

Additionally, you get tax relief on pension contributions, so you won’t feel as though you’re paying as much as you are. Use this handy pension tax relief calculator to see how much would actually come out of your wages.

A good credit score can help you get preferential deals

Use your credit card, but wisely

Using credit in the right way can help you manage how you spend and build up your credit rating.

Whether you would need to turn large financial contributions into manageable monthly payments or would like to benefit from a range of rewards, it’s all about finding the right credit card for you.

Find out more about the benefits of an M&S Credit Card here.

Published: 29 November 2018