The beginning of a new year can offer a great opportunity to take back control over your finances and lay the foundation of long-term wealth. Of course, changing every aspect at once may not be feasible for every couple or family. However, there are plenty of small habits and initiatives that can help you save more, reduce your debt, and improve your financial outlook over time. Let’s look at some tips below.
One of the most important starting points is to set clear financial goals. Don’t be too general when setting your objectives! Simply stating “I want to save more” or “I wish to reduce my credit card debt” may not get you so far. Instead, try writing down a few, concrete, measurable, and achievable goals. Some examples include:
Next up, work with your family, partner, or friend to create a well-planned monthly budget. This should account for your income, including your salary and any dividend you may receive, as well as outgoings, such as mortgage payments or rent, groceries, childcare, and car-related costs.
The trick with making a monthly budget is to adjust it to the month ahead. During some periods, such as Christmas or summer, you may be spending more, while some months can offer a great opportunity for saving more. So, make it a monthly appointment to review your budget!
Tracking your spending may sound simple, but it’s often too easy to overlook costs and underestimate the impact of impulse purchases! To avoid surprises, use apps to track your spendings and review your statements at the end of the month to check where you could have saved more and what habits need adjusting.
Building an emergency fund is essential to navigate rainy days and manage your finances with peace of mind. Plus, having a solid savings account can help you lay solid foundations for long-term wealth! To make it easier to build your fund, automate transfers each month. This way, you may not even realise that you are saving, but a percentage of your salary is automatically redirected to your saving fund.
Your debt can have a significant impact on long-term finances. It is not just about having outstanding monthly payments that can weigh on your wallet and peace of mind. It is also about the interest rates that can inflate your outstanding debts, especially in the case of high high-interest borrowing like credit card debt or payday loans. For example, you might focus on paying off your credit card balance first, or making extra payments each month towards your mortgage to reduce what you owe faster.
Some tips to better manage your debt include:
Tax planning may seem something that just businesses and corporations do. However, planning your taxes properly can have many benefits, especially if you are self-employed or you wish to optimise your income.
One of the best tax planning strategies is to work with a specialist. Other tips include:
Today, subscriptions are truly everywhere—for streaming services, clothes, food and drinks, and more. While these may be very convenient, they may cause you to lose track of your spendings. For instance, did you know that, in the UK, the average spent on subscriptions is between £91 and £301 depending on age?
This month, take a minute to review your subscription and cut down on services that you may not truly need at this time.
The right saving habits can make a real difference in how much you are able to save up this month. And, this is not about doubling your salary or drastically reducing your expenses. It is more about noticing how you manage your money on a daily basis. While the best strategies may vary from one person to another, some golden rules include:
Investing isn’t just for millionaires! No matter what your starting point is, there are many user-friendly platforms that allow you to start investing even with minimal capital. Keep in mind that investing isn’t the same as trading. Instead, it is more of a long-term, calculated strategy that allows you to take advantage of key concepts such as compound interest.
Everyone has a different strategy, but some simple starting points include:
Last but not least, understand what your risk tolerance is and only invest what you can afford to lose!
Above we have looked at some easy strategies that you can implement in your daily habits today to make a big difference down the line. However, of course, if you have doubts or are unsure how to start, it may always be worth it to partner with an expert financial advisor or tax planning service provider who can help you find the best strategy and actions for your unique needs and goals.
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