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Give your finances a January detox

Give your finances a January detox

Category: Money

Updated: 12/01/2016
First Published: 12/01/2016

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

So, 2016 is now in full swing. Have your resolutions started to slip yet? Chances are the resolve is beginning to wane for many, but there's one kind of January detox that you shouldn't turn your back on – the financial one.

Know your goals

Whether you're hoping to save more, pay down debt, reduce your weekly shopping bill or simply have more disposable income left to see you through the month, you'll need to thoroughly detox your finances if you want to achieve your goals.

But, the key to staying on track is to have a clear idea of what those goals actually are. Be specific – e.g. "save £50 per month" rather than "save more" – write them down and remind yourself what you're trying to achieve on a regular basis, and make sure to keep tabs on your progress, too.

Keep track

Let's say you're trying to save for a summer holiday, or even a new car. Note the date in your diary of when you hope to have the money and work backwards to determine how much you'll need to save each month, setting reminders so you can stay on track.

Another great way to remind yourself of your goals is to set up separate savings accounts for each purpose – if you name them accordingly (car fund, holiday fund, etc.) you'll have a clear visual reminder of your goals and will easily be able to see your progress, which will hopefully motivate you to continue on your path.

The same applies if you're trying to pay down debt. Make additional credit card payments wherever possible and regularly check your balance so you can see how you're progressing, and ideally have a goal in mind of when you want to be clear from debt – and how much you'll need to pay off each month in order to achieve it.

Start small

Of course, you'll need to start small. If you've never been that financially organised it may be difficult to suddenly alter your behaviour, so slow and steady should be the way forwards. Start by making a note of your outgoings and work out a monthly budget – prioritise bills, credit payments and essentials so you can see how much you've comfortably got left each month. If you overspend it's time to get analytical, and if you're really truthful, you'll probably notice areas that could be cut back on, with shop-bought lunches and takeaway coffees often a good place to start.

Essentially, you'll want to cut back on any unnecessary spending, and it's important to be ruthless – it may be tough to begin with, but the rewards will be worth it. Avoid temptation by putting any extra cash you accumulate into a savings account, or use it to make an extra credit card payment. That daily Starbucks coffee could easily amount to £60 per month, so it could soon add up.

Up the ante

So, you've started assessing where your money goes and are on the road to understanding your finances inside out. Great stuff! Now you've identified small areas of improvement, you'll want to think bigger – you could compare energy tariffs or broadband packages to see if you could reduce your essential spending, and even look at remortgage deals if your fixed rate is coming to an end.

Be credit savvy

If you maxed out your credit card over the festive period it could be time to consider switching to a card that offers 0% on balance transfers, but these will only be suitable for those with a sound credit history. If that doesn't sound like you, it's still important to be sensible with your credit commitments – make sure you can cover at least the minimum payment each month, and ideally, add a few extra pounds here and there to reach your goal.

Truly detoxing your finances is all about staying in control, and if you're able to get into that mindset, make a budget and stick to your goals, you could find that your financial resolutions will far outlive the diet…

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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