7 new year money resolutions for 2021

Make 2021 the year you get smart(er) with your money. Get your finances fighting fit with our top tips.

Make 2021 the year you get smart(er) with your money. Get your finances fighting fit with our top tips.

Anelda Knoesen
From the Money team
4
minute read
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Posted 13 JANUARY 2021

1. Put your money under the microscope

You can’t manage your money unless you know how much you’ve got to play with and how much you’re already spending. So kick off your new year by taking a really good look at your finances.

Make a list of your incomings – everything you earn from your regular job and any side hustles, plus any other source of income, like any state benefits – and your outgoings. That’s what you spend, including on non-essentials (don’t miss anything out). Then see if you need to cut back or if you’ve got something over.

2. Assess your savings situation

Not already saving? Start by building an emergency fund of at least three months’ essential outgoings in an easy access savings account.

If you’re already saving, do a review of your accounts. Could you find better rates or an account that suits you better in other ways? Think about what you want to achieve with your savings: if you’ve decided to save for a first home or retirement, for example, it might be worth looking at a lifetime ISA. If your goals are more short-term, a regular saver might help.

3. Split your money

Some people find it helpful to divide their money into different pots for different things, like bills, food, car expenses, clothing, kids’ expenses, going out etc. You could even open different accounts for different stuff. Money apps can come in handy as they can give you an overview of what proportion of your spending comes under different categories.

4. Keep track of your spending

You can do this the old-fashioned way by just writing it down every time you buy something or pay a bill, then checking against your bank statement. Or to save paper and effort, you can use one of the many budgeting apps on the market. Some current accounts offer apps that notify you every time money comes into or out of your accounts so you’re always on top of what’s happening with your finances.

5. Take a look at your debts

If you want to cut down on your credit card debt, you could think about a 0% balance transfer card. With these cards you pay no interest on the balance you’ve transferred for a set period of time. There will typically be a balance transfer fee though, and you will need to pay off what you owe within the time period otherwise you’ll be charged interest. Also, you must make your monthly minimum repayments on time. If you don’t, you could lose the interest-free terms and damage your credit score.

Another debt option is to consolidate your loans into a single loan. You’d only have one payment to make each month, but extending the length of your debt might mean paying more interest and cost more in the long run. There might also be early repayment charges to consider.

6. Don’t pay more than you need to

If you’re in the red you’ll need to look for places to cut back. But even if you’ve got a healthy bank balance, why pay more than you need to for the basics? You could save hundreds of pounds each year by doing simple things like switching your gas, electricity, broadband and car insurance.

Not sure what your bills should be? Our household bills checker shows the average of what your neighbours are paying for their energy, broadband and home insurance. So you can compare your own bills, then get a quote with us and see if you could save.

7. Be smart if you want to borrow

Thinking of getting a credit card to buy something in the January sales or a personal loan for doing some home improvements? Shop around for the best deal for you. When you compare with Compare the Market, we’ll only show you loans and credit cards that you’re likely to be accepted for, so you can do your research without damaging your credit record.

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