Most people making New Year’s resolutions are thinking about health, fitness and money. In fact, chances are you’re used to making financial resolutions every year – and then probably abandoning them along the way.
According to a survey conducted by Perkbox, money is the biggest cause of stress for 61% of adults in the UK. If you’re part of that group, making some good financial resolutions this year can help you do better as 2021 rolls around.
Here are five financial resolutions to help you overhaul your money goals and reduce your stress in the year to come.
1. Learn to budget
One big cause of stress when it comes to finances is not knowing where your money is going. If you seem to always be short on funds, a budget can help you get a better grip on expenses.
Budgets don’t have to be complicated to be effective. You can use a basic budget template to get you started or use budgeting apps to keep track of your income and expenses as part of your New Year’s resolutions.
2. Cut back on poor money habits
We all have at least one bad habit that negatively impacts our finances. Maybe you eat out too often or go shopping out of boredom. Or maybe you make online purchases on impulse and end up buying things you don’t actually need.
Trying to correct many things at once can feel overwhelming, but you can choose one thing to work on. Maybe commit to trying out a new recipe at home every week instead of dining out. Or find alternative ways to entertain yourself – reading or taking a bubble bath – instead of shopping online.
3. Build an emergency fund
Nothing says stress like running into an emergency and having no money to cover the bill. But recent research shows that half of all Brits surveyed had no savings to get them through the pandemic.
If you’re one of them, your New Year’s resolutions could include working towards starting an emergency fund. Experts recommend setting aside three months’ worth of expenses, but even £500 in savings will make a big difference.
Once you start working on it, you can then add a bit more every month to help it grow.
4.Pay yourself first
If you think you don’t make enough money to save, you haven’t embraced the ‘pay yourself first’ concept. Simply put, you should set aside money into savings or a retirement account before you pay your bills, go shopping or buy food.
You probably won’t even notice it if you set aside a small amount every month, and you’ll be creating a healthy money habit. Plus, sending money to savings first will force you to evaluate your expenses in other categories to account for the deficit.
5. Practice living more frugally
Overspending will take a toll on your finances but also on your emotions. Being more careful with your money means you’ll have more available to save and invest, and you’ll be able to plan your future.
Living more frugally starts with small changes, such as packing your own lunch for work, biking or walking instead of driving whenever possible, and buying things second-hand instead of new when you can.
You can also stop buying bottled water and find free ways to entertain yourself – go for a hike, have a picnic when the weather allows and watch a movie at home instead of going out.
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