words Al Woods
As January approaches, many of us will begin thinking about our resolutions for the new year. And while diets, cleaning the house from top to bottom and getting to the gym more often will be top priorities for most people, there’s another thing you shouldn’t neglect: your finances.
We all know that we should really be spending less, saving more, and planning for the future, but after the pricey Christmas holidays, it can be tempting to bury our heads in the sand. If getting your finances in order is on your to-do list for the new year, but you don’t know where to start, then we’ve shared four easy fixes help you boost your savings, get out of debt and improve your credit rating. Just read on to learn our top tips to improve your financial wellbeing for 2018.
1. Start a rainy-day fund for emergencies
Every household should have some extra cash stashed away for a rainy day. If you’re one of the 24% of British families that currently have no savings whatsoever then opening a savings account should definitely be your new year’s resolution, as it will give you a much-needed financial safety net. This way, you don’t have to fall into debt should a surprise expense occur.
Without an emergency fund, it’s difficult to ever achieve financial peace of mind, so make this the year you begin to put a bit of money to one side every month. If you’re short on cash or still climbing out of your overdraft, then start small. Putting aside as little as £8.50 a week — around the same price as a cocktail in a bar — will soon add up to an emergency fund of £221 in just six months. While it may not sound like a huge sum, it should be enough to tide you over if you get landed with an unexpected bill.
2. Beat the rate rise by remortgaging your home
If you’re a homeowner with a variable-rate mortgage, you’re probably aware of the recent Bank of England interest rate rise. But you should also be aware that when the interest rate rises, this usually means that further increases are still to come. If the fixed-rate term of your mortgage is nearly over, then it’s well worth shopping around to see if you could get a better deal and lower monthly payments with another lender. This way, you stand a better chance of getting a product that will save you money before rates get any higher.
Before you consider remortgaging, you should always seek professional guidance to make sure you get the best possible deal. For extra peace of mind, you might want to consider a broker who can arrange mortgage protection insurance, which will cover the cost of your repayments should you become ill or injured. The Mortgage Genie offers a variety of insurance packages which will cover your mortgage should things go wrong.
3. Review your accounts at least once a week
If you’re going through a difficult time financially, it can be tempting to ignore your bank balance, but looking the other way can put you at risk of fraud, missed payments and late fees. Instead, make it your new year’s resolution to review each of your bank accounts at least once a week. Although this might seem time-consuming, it only takes ten minutes to check over your bank accounts and can help give you peace of mind. This way, you can monitor any unusual activity or bounced payments, so you won’t have to worry about fraud or missed bills.
If you have several bank accounts, or lots of complicated incoming/outgoing payments and direct debits, it might be worth keeping track of everything using a financial management app. This way, you can check all of your accounts at the same time, and you won’t need to remember lots of login information. Plus, apps such as OnTrees will even create visual summaries of your spending, so you can review your finances at a glance.
4. Improve your credit score
If you’ve had defaults, late payments and other credit issues in the past, then getting a loan of any kind can be tricky. If you plan to get a mortgage in the future, or to buy a car or other large purchase using a payment plan, then a bad credit rating could see you turned down, even if you have the money for a deposit. So, it pays to devote some time to building up your credit score.
If you don’t have much of a borrowing history yet, then getting a credit card can be a good way to build up your credit rating. As long as you spend responsibly — ideally on something that’s already a planned part of your budget — and then pay it all back on time, you should start to see your credit rating improve. There are a number of specialist credit cards available for those with a lower credit score: you can find out the pros and cons of each card, and how likely you are to be accepted for them, in this Money Saving Expert guide. Always think carefully about how you plan to pay off your cards, and remember that charges on a credit card can quickly spiral if left unpaid.
Getting your finances organised doesn’t have to be complicated, difficult or expensive. Just take these financial well being tips on board, and you’ll soon be on top of your spending habits and financially secure for the rest of 2018.