Want 2019 to be the year you master your finances? Our top 4 tips will help you get to where you want to be.
Few things can make your heart feel fit to burst with possibilities like the new year. It’s a fresh start. 365 days of new opportunities. And mastering your finances can certainly help you get closer to your goals and resolutions.
When it comes to your finances there are 4 main areas to look at: your bills, your accounts, your debts and your savings. Here’s what you can do to get your finances in top shape in 2019.
1. Give your bills a makeover
The average British household spends £845 a month on bills. But you could spend much less — and save hundreds of pounds — by switching to cheaper deals.
For example, the Energy Helpline reckons households can save up to £537 a year by switching energy supplier. Similarly, changing your broadband package could save you up to £336. That’s £873 a year (or £73 a month) saved without quitting your daily latte.
Switching energy supplier
Switching energy supplier is usually straightforward. Your new supplier will handle the switch, and there won’t be any interruption of service. You can find the best deal for you, based on your usage, simply by logging in ClearScore and heading to the 'Offers' page.
If you’re not able to switch because your locked into a fixed plan, it’s worth trying other ways to cut your energy bills, such as running your home more efficiently.
Changing broadband provider
Broadband packages usually have a cheap introductory period, after which the price goes up. The UK market is very competitive, and providers come out with new offers throughout the year. So, switching could mean faster speeds for less money.
Switching your broadband involves setting up a new router and, possibly, spending a few hours offline. But time the switch so it happens while you’re at work, and you won’t notice.
Don’t want to switch? Try haggling
MoneySavingExpert found that 76% of broadband customers who haggle get a discount, an upgrade or both. The trick is to try at the end of your contract, as your provider will be keen to keep your custom.
Can you slash other outgoings?
It’s also worth checking if you could save on other bills. For example:
Is your mobile contract about to expire? If your phone is still in good shape, it may be worth switching to a SIM-only plan
2. Make sure you're getting the best rates on your credit and savings accounts
Interest rates went up for the first time in 10 years in 2017, and they may go up again in 2018.
Although last years’ increase and any future increases will be relatively small compared to the rates of 2007 (when they were above 5%), it could end up costing consumers quite a bit more on credit – especially if we’re talking large amounts of money such as your mortgage.
If you do have a mortgage, your monthly repayments could be about to increase. In which case you may want to consider remortgaging to make sure you’re paying the cheapest rate you can.
If you don’t have a mortgage but you’ve been thinking of buying a home, now may be a good time to take the plunge. By opting for a fixed rate mortgage, you could lock in a good interest rate (and a cheaper monthly repayment) for up to five years.
When it comes to cards and loans, the interest rate hike may affect the terms on offer on new products. You may start to see offer periods on 0% interest rate cards get shorter and you may notice credit cards and loans now come with higher APRs. If you’re planning on taking out credit anyway this year, you could save money by committing before interest rates are increased again.
On the plus side, if you have savings you could be about to benefit as the interest rate hike is passed on to consumers. It means now may be a great time to review your savings account or start one if you haven't already.
3 - Stay on top of your debts
Whether you’ve been a bit too festive at Christmas or have long-standing credit balances, the start of the new year is a great time to take stock. This allows you to see what you’re up against, so you can come up with a plan to make your debt cheaper and more manageable.
If you have high-interest credit or store card debt, it may be a good idea to shift it to a balance transfer card. These cards usually charge low or even 0% interest (but only for an introductory period). Balance transfer cards can also make managing multiple debts easier, because you’ll only have one monthly repayment to worry about.
Alternatively, you may want to consider a debt consolidation loan. Like balance transfer cards, these loans allow you to gather multiple debts in one place, making them easier to manage and they may also collect less interest. The main difference is that you can usually consolidate a greater amount of debt with these loans than with a balance transfer card, so if you have a very high outstanding balance they could be a good option.
4. Future-proof your finances
They say life’s what happens while you’re busy making other plans. But while you may not always have control over events, you can definitely take steps to make sure you’re in the best financial shape possible to face them.
Create a realistic budget
Budgeting can help you avoid overspending and free up money you can use to reach your goals. But only if you do it right.
The trick is to strike a balance. It’s good to be careful about how you spend your money, so that you don’t fritter it away with nothing to show for it other than a twinge of regret. Yet at the same time you don’t have to cut out the things you love, as long as you budget for them. It’s all about making a mindful choice when it comes to your spending.
Build a rainy day fund
The Money Advice Service suggests saving at least three months’ worth of essential expenses. However, every little helps. Debt charity Step Change reckons half a million Brits could avoid problem debt by having just £1,000 for emergencies. You could save that in 12 months by setting aside £2.75 a day.
Whatever your rainy day fund, it’s better to set a clear goal. The best goals are SMART — specific, measurable, attainable, relevant and time-bound. So, instead of “saving up for a rainy day,” try “setting aside £2,000 by the end of 2018.” It’s easier to track progress on the second goal, which helps you stay motivated.
Take control of your credit score
It takes time to build a great credit score. So, whether you plan to take out credit in 2019 or not, staying on top of it is always worthwhile. That way, when you do need to take out credit, you’ll have a better chance of being accepted and getting a good deal.
To keep your credit score in good shape:
Monitor your credit report regularly, so you can get in front of any issues before they harm your score. It only takes five minutes.
Use credit little and often, and make sure you never miss a repayment. This builds a history of good borrowing behaviour, which tells lenders you can be trusted.
Avoid making a lot of credit applications in a short space of time. This could give the impression that you’re desperate for credit (even if you aren’t), which could harm your score.
You can learn more about improving your credit score here. Or, even better, try our free Shape Up coaching plan for tailored tips and a handy to-do list to help you prepare your credit score for what’s in store in 2019.
Final word (and a bonus tip)
The last fireworks are fizzling out. The party’s over. It’s go time. Time to get down to business and work on your new year goals.
Following these tips should put you well on your way to financial mastery in 2018. But here’s one final suggestion: don’t try everything at once. Instead, focus on making small incremental changes. That way, you're much more likely to stick to any resolutions you make, allowing 2019 to be your best money year yet.