Studies have shown that at this time of year millions of people in the UK are left with debt after overspending at Christmas, so its the perfect time to set those financial resolutions.
With 2022 mere days away, we need to brace ourselves for a highly anticipated increase in the cost of living. Petrol prices are likely to stay high or even go up, together with the price of food and energy. The Bank of England has told us that inflation could go up to 6%. We are all going to have to re-think our spending and cut out anything that’s really not essential.
With this in mind I want to share some valuable advice on how to approach our finances this year.
Jasmine’s Financial Resolutions:Live by these rules:
- Spend less than you earn and invest the what’s left over (we understand that this simply isn’t possible for some incomes, but for those who can – do it!)
- Pay yourself first. Set up standing orders at the start of the month into savings and investments for yourself before you spend anything.
- Regularly think about what you spend. Do you need it or even want it or are you just being influenced to spend on rubbish? Keep questioning.
Try to invest. Even if £2 a month
Firstly it’s important to put some money aside into a savings account to cover you in case you lose your job and can’t pay the bills for a few months. After that, though, it’s important to invest each month, even if you only have a couple of quid to do so. In fact there are some handy apps that help you sweep a few pence into an investment fund every now and then. Try Wombat or CIRCA5000 apps that do this for you. Remember Financial resoutions needn’t always be big ones.
Get your personal finances in good shape
It’s actually not that hard, even if your money’s in a complete mess at the moment. Many of our money problems come from not facing our situation (keeping bills in the drawer, not looking at our bank statements, spending without thinking, and so on) so get those bills out, take a good hard look at where you’re at and you can work from there. Money problems can also come from how we’re feeling and what our emotional situation has been like, so don’t be angry at yourself for letting things get into a mess. We are all working out how to run our lives properly and even our best efforts to get on top of things can be thwarted by events!
Once you have taken a good hard look at your financial situation (ideally with a nice friend or family member with you to hold your hand while you do it), then set yourself a plan to pay off debts and then put money into savings. If it all looks too horrible, go to one of the free debt advice charities like Community Money Advice, StepChange, Citizen’s Advice, National Debtline or Christians Against Poverty. They will help you speak to creditors if you need it and will also show you how to budget.
Make that last tenner grow
It’s always a good idea to think long-term when you’re looking to grow your money. In the short-term there are risky possibilities like buying cryptocurrencies, but to have a proper possibility of making money, put that tenner into a stocks and shares ISA, ideally in an index-tracking fund, and leave it there (adding to if you can) for a good ten years. Another possibility is to put it into a nice pension, either your work pension (always a good idea to max that out as much as you can) or set up a Self-invested Personal Pension (SiPP) and put the tenner into that. You will instantly get an extra 20% added in by the government (the tax you would have paid on that money) and over time the tenner will grow until you retire.
Don’t Hide From Finances
Happily there is a LOT of help on the internet. There are the free debt advice charities mentioned above, there are Credit Unions that help their members budget, there are websites like MoneyMagpie.com that are full of help and advice and there are podcasts and webinars that people can join like the ones we run at MoneyMagpie.com. It’s also worth looking at the money pages in your regular newspaper as they have helpful advice. Just reading one money article a week in a newspaper or newsletter like the ones we send out at MoneyMagpie will give you more and more information to work with.
Supplement your income.
There are so many ways to supplement your income these days. Whether it is selling your old Computer Games to tasting food, there are lots of opportunities here We have great ideas for that on MoneyMagpie so do look here.
And Finally Jasmine’s tips for the self employed:
“Yes I have always been self-employed so I have learnt the hard way! The important thing for people like us is to have money set aside ‘just in case’. Our payments are often irregular so if you have money set aside then it will cover your bills in the months when you don’t get paid. Also force yourself to set up a pension (probably a SiPP) early on, even if you just put in £25 a month. You will thank yourself later on! If you have the money, also set up a stocks and shares ISA, including a Lifetime ISA if you’re under 40. Set up a standing order every month to put money into that as well as your pension and that will help to set you up for later.
If your profession doesn’t quite cover your costs at the moment, look into other ways to supplement your income. Again, this will make it easier for you to get through the months when no one is paying your invoices (sadly there are a lot of those!).”