Have you made any New Year’s resolutions for 2018? Maybe you want to work out more or drink less alcohol. Like many of us, you could be hoping for a financially stable and maybe an even richer and more financially prosperous 2018. But without winning the lottery, how can you go about clearing your debts and saving a decent amount of money?
January is as good a time as any to get your finances in order and start saving. Make debt clearing and money saving two of your New Year’s resolutions, and start 2018 in the best way possible. With the right kind of planning and insight, you could find yourself out of the red, with savings to hand next Christmas.
Step one: figure out what you want
If you want to save money in the new year, you need to first make a goal. How much do you want to save? Are you saving for something in particular? If so, how much will you need to put aside each month? By knowing roughly how much money you’d like by 2019, you can plan out a weekly and monthly budget. Take into account your outgoings and living costs, then put aside a specific amount of money each month. If you want to get out of debt in the new year, you need to start by working out how much you owe and to whom. Make a list of any debts you want paying off, from credit card bills to loans, and make a note of exactly how much you owe to each lender. This will give you a clearer idea of how much money you need to save to clear your debts.
Step two: make a debt management plan
If you find yourself utterly confused by the amount of debt you owe and you’re losing track of who to repay, don’t worry, because a debt management plan could be the answer. A debt management plan could help you create a simple plan with the lenders about how you can pay off all of your debts, without it crippling you financially and leaving you short each month. Your repayment plan will include a budget that will help you see how much you can afford to pay each month. The budget will take into consideration your living costs such as rent, utility bills, food and transportation, ensuring that you don’t have to sacrifice anything important to make repayments. If you have debts in more than one place, your plan will accommodate that by showing separate payments to be made. Debt management plans are specifically designed to help ease your stress and let you focus on making repayments rather than worrying about how much you owe.
Step three: open the right kind of bank account
If you want to make the most of your money, you should open a savings account. An ISA could help you to make interest on your money. A separate savings account from your regular current account can help you to avoid dipping into your savings. If your savings account comes with a card, put it somewhere safe at home and don’t take it out with you. This eliminates the temptation to spend your savings when you’re out and about. Set up monthly standing orders between your current account and savings account so you don’t need to think about saving money, your bank accounts will do it for you.
Step four: make a budget and save your money
Whether you want to save money or get out of debt (or both), a budget is vital to getting your finances in order. Write down a daily, weekly and monthly budget that takes into account your outgoings and living costs. Anything left over should be put in the right place, either towards paying off a debt or into a savings account. Save money in as many places as you can. Avoid big brands and stick with own branded products. Use price comparison websites to switch companies when it comes to utility bills, broadband and phone plans to ensure you are saving in every possible area. Cut down on excessive spending and spend more evenings cooking at home, and doing free things in your city or town. If you stick to these, by the end of 2018 you’re bank account will thank you and you will reap the rewards.