Guest Post: How to start the New Year with a clean(er) slate
Sophie Jackson - www.sophieschoice.co.uk
"The New Year gives us a chance to start afresh - for new beginnings perhaps. And whilst you’re busy jotting down your resolutions, don’t forget about your finances.
Taking the time to manage your money better can really pay off, excuse the pun! It can help you stay on top of your bills and save a good chunk of money each year. You could use extra savings to pay off any manageable debts you might have, such as amounts on store or credit cards. Any extra savings could be put towards your pension and thinking about the future or be saved up to be spent on your next car or holiday.
Forget about looking back at any money mistakes you may have made in the past year, look forward, think positively and get ready to make some changes. To give you a head start, here are my four top tips on how to start New Year with a clean(er) slate…
1. Set a solid savings goal
One of the things I’ve learnt the most about in the last year, is the importance of saving. Having savings allows you to do so many things. If this isn’t something like a holiday or a personal treat, then saving to get on the property ladder, home improvements or a new car could be on the list for you. Whatever you’re saving for set yourself a monthly savings goal.
Once you’ve set that goal, stick to it. Over the past year, I’ve been more savvy with my saving and with this extra money I’ve been able to do some travelling, get my Christmas presents bought without feeling the festive pinch and done some necessary improvements on my house. A great feeling!
2. Don’t forget about your debts
Clearing, or at least getting your debts down to a more manageable level is super important. This may be a loan you’ve taken out for a car or repayments on credit cards - just check if there are any repayment charges first. As well as concentrating on your savings next year, try and get that debt down too. If debts are large and saving does not seem realistic, aim to clear debts before trying to save to give yourself some breathing room.
By increasing your monthly direct debit to your credit card or loan repayment by £20 a month, you can scrape off £240 a year! Now I don’t know about you, but I’ll definitely be doing this one with my credit card. I can quite easily cut that £20 off somewhere else, such as that new top I might have purchased or buying daily coffees. To make changes, we have to make some sacrifices after all, whether they are big or small. Check out The Nottingham’s #SavingSwaps article to see how you could save over £2,000 with easy regular swaps!
3. Get yourself the right savings account
Making sure you have the right savings account is more important than you may have originally thought. Different financial services organisations offer so many products at a variety of interest rates and often with other rewards such as The Nottingham’s Member Rewards for qualifying members. But, finding the best one is so confusing, right?
There are many options to choose from, and if you’ve never had them explained to you then it can be almost impossible to decide.
To give you options, The Nottingham offer a range of savings accounts but have recently launched the Lifetime ISA. A LISA (or Lifetime ISA) is a relatively new product which you’ll be sure to hear more about in the coming months. The LISA (pronounced Lie-sa), is a Government-backed account and a way for those aged 18-39 to save for their first home or for retirement. It's a tax-free savings account that lets you save up to £4,000 every year, and you get a bonus of 25%* on whatever you save. This equals £1,000 if you save £4,000!
The Nottingham is now offering the Lifetime ISA in all of their branches and online.
4. Set up a monthly budget
Something that has helped me to budget is to have a spreadsheet, and if you’re not a fan of doing it online, then you could jot your finances down in a book. Having a clear and concise plan has aided me to get on track with my finances and keep everything in check. I’m not talking about keeping all of your receipts and logging literally everything, (unless you want to!) but simply making a note of all of your direct debits, standing orders and every regular outgoing payment you have. This will be your mortgage or rent, phone bill, car bills, food shopping etc.
With this you’ll clearly be able to see what disposable income you have left once the outgoings have been taken away from your incoming wages or salary. Knowing this, you’ll be able to work out what you can save and what you can spend on yourself. By setting yourself your monthly budget and sticking to it, you’re less likely to end up in debt and being caught out by unexpected costs.
Why not make 2019 the year to get your finances in order? By making these changes early, you can make next year a less stressful one when it comes to talking money. Save for that dream holiday, your first home or getting money behind you for the future.
I’ll finish on one of my favourite quotes to do with money…"
“When you’re young, you have time and energy, but no money. When you’re middle-aged, you have money and energy, but no time. And when you’re elderly and finally have time and money, you no longer have any energy.”
*The 25% bonus is provided by the government. The Lifetime ISA can be opened by customers aged between 18 and 39 years of age that reside in the UK to either save for their first house purchase or their retirement. The product has a 20-25% charge associated with any withdrawals that are not an eligible life event (first house, aged over 60, terminal illness and deceased). Investors can pay in up to £4k per tax year into their Lifetime ISA and the government will pay a 25% bonus on a monthly basis from 6th April 2018. Customers cannot pay into their Lifetime ISA from the age of 50+ or earn the 25% bonus. If you save in a Lifetime ISA instead of enrolling or contributing to a pension scheme, you may lose valuable employer contributions. Entitlement to any means tested benefits may be affected. The 20-25% withdrawal charge is on everything (deposits made, bonus and interest). Any other withdrawals made from your Lifetime ISA between now and Monday 5th April 2021 will incur a 20% Government withdrawal charge. After Monday 5th April 2021 you'll be charged 25% which means you could get back less than you paid in. For full terms and conditions please ask branch staff for our Keyfacts document and summary box. The value of investments can fall as well as rise. You may get back less than you invested.
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