We all do it. Well, I know I do. We make that list in the week between Christmas and New Year of all the things that we promise ourselves that we will do over the course of the next 12 months that will fix our lives, make us more financially stable and let us save and do the fun things that we want to do. If you are anything like me, previous years have seen the systematic crossing off the resolutions that have been either broken or seem increasingly impossible as time marches on.
It puts you in a place of self-limitation. Noone is perfect and none of us can claim to be fully motivated all the time. Anyone who claims to be is probably self-deceiving. So, what can we do as we move forward into the new year that will improve our financial quality of life and ensure progress? The answer is – anything – in realistic steps. The size of those steps remains entirely up to you.
We don’t all have a spare £10,000 to invest or have the resources to purchase and develop property. For some, even if we managed to save that amount of money, assessing the potential risk of our investment would put us off.
There are immediate, realistic steps that we can take to improve our financial outlook. The first is to assess our current situation. Consider the debts which you currently owe, evaluate your ingoing and outgoing expenditure and try to calculate any deficit between the two.
Credit reports are available free of charge from most credit reference agencies and can paint us an accurate picture of most of our creditors. You can also often access advice on improving your credit score if required.
Once we have a full picture of our financial situation, we can then examine the areas where we can make changes that will make the most impact. As simple as it sounds, the aim of the game is to maximise our income and to minimise our expenditure.
This is the area that most struggle to overcome. Asking for that salary increase at work isn’t always the easiest of conversations to have, and sometimes not the most appropriate, particularly if the company you are working for is feeling an economic pinch. There are other options, such as requesting an increase in hours if you are on a low hours contract, or even overtime (if it is available) can give you a short-term increase in income.
The alternative for those on low incomes who are struggling is to look at benefits you may be entitled to. There are many who are in positions where they are entitled to, but do not claim certain benefits for one reason or another. Checking this doesn’t cost anything and can sometimes increase your income.
Another consideration for increasing income is the option of renting out spare rooms or space in your home. Websites such as AirBnB offer the opportunity to rent rooms out on a short-term basis and many people earn a passive income through this outlet (See our article on AirBnB HERE). Anyone considering this option should pay mind to insurance and tax issues to avoid any further costs down the line.
The other concern is to examine where the money you already have is going and think of ways that you can reduce this.
Utility bills are areas where savings can be made. By using price comparison tools and switching to better tariffs and deals, you can save massively over the course of one year. (You can read our article on effectively planning energy costs HERE).
If you are not in a position to switch suppliers for one reason or another, making small lifestyle changes (such as only boiling as much water as we need when using the kettle or switching the TV off of standby when not in use) can save us small amounts. These add up over the course of a year and do make a difference. As my grandmother used to say – “Take care of the pennies and the pounds will take care of themselves”.
There are other areas where savings can be made, such as when we are doing our food shopping. By planning meals in advance, making sensible use of special offers at the supermarket and batch cooking (freezing if needed) we can drastically reduce the amount of money we are spending. Preparing a shopping list before going to the supermarket, and never shopping on an empty stomach can also reduce those shopping bills (it’s always the ready-to-eat cocktail sausages that get me).
Gym memberships can be expensive. Many gyms have introductory offers and switching gyms can be beneficial. Sometimes alternatives such as getting public transport to work can be beneficial for our health (and wallets).
Terrified of answering the telephone? Petrified of opening mail in case it’s another red-letter from a creditor?
The answer is to not go it alone. By discussing the options that are available with an expert who understands the solutions that are out there, you can find the answer needed to get out of that financial black hole and moving forward with your life.
Healthier choices can be linked to improvements in our financial situations. By planning more effectively in our food shopping, meal preparation and travel choices, we can improve your health as well as your finances.
The choices to improve finances and health can be linked to improvements in overall wellbeing. In order to operate effectively as a contemporary consumer, we must be able to effectively assess the multi-faceted aspects of our financial lives. Making small changes to the way we do things can benefit us in the long term and make sticking to those resolutions more realistic.
consumeradvice.scot have put together our top tips for tackling 2020 head-on, ensuring that you can put your best foot forward into the new year,
- Get your ducks in a row – Lay it all out in front of you. What have you got going out and coming in? How can you balance your books? Look at the areas where you have been overspending and cut whatever is unnecessary.
- Maximise income – Examine your income. Are you entitled to any benefits? Do you have access to alternative sources of income that could boost your earnings? Many use the short-term rental of spare rooms on AirBnB? (Always ensure you are taking the correct legal & financial precautions such as home insurance and paying the relevant tax).
- Minimise outgoings – Examine your outgoings. Are there better deals out there for your gas and electricity supplier? Are you receiving all the discounts on things such as council tax? Compare deals on mobile and broadband contracts.
- Look at free alternatives – Not all social activities involve spending money. Joining a gym is the usual new year’s resolution but can increase your monthly outgoings by £20-30 per month. Look at alternatives such as walking groups in public parks or even simply walking to work instead of taking the car.
- Use offers to your advantage – Make sensible use of supermarket deals. Buy items in bulk that are suitable for freezing and plan your meals. It’s surprising how much money you can save by planning meals in advance, batch cooking and freezing.
If you would like more advice or guidance on any consumer matter, you can contact consumeradvice.scot on 0808 164 6000. We are open 9am-5pm, Monday-Friday. You can follow us on social media – Twitter: @advicedotscot and Facebook at www.facebook.com/advice.scot, Instagram: @advice.scot, or get ahead by visiting our knowledge centre at www.consumeradvice.scot.