Whether your bank balance took a beating in 2009 or you managed to stay financially afloat there's always room for improvement. Find out what you need to do to make the most of your money in 2010.
Sorting your finances isn't anywhere near as difficult or time consuming as it can sometimes seem. And while New Year's resolutions are never going to be fun, saying goodbye to money stress and hello to a healthy bank balance definitely is! So, all together now, "This year I will"...
1. Face up to my finances
If you've been burying your head in the sand it's time to face up to what you're spending and when. That means opening those credit card bills, looking at your bank statements and figuring out where your money is going. Keeping a spending diary for a week, or better still a month, is a really simple way to figure out your financial habits and pinpoint where you can save money by spending smarter.
2. Spend less than I make
Whether you want to grow your savings or pay off your debt, this is a must if you want to be in control of your finances. It only takes a few minutes to write a budget and it's definitely worth it as far as your financial health is concerned. While the harder part is sticking to it, if you aim to be as realistic as possible you won't feel like you're missing out but you will be able to make your money go a lot further.
3. Stop paying my bank
Whether you're shelling out for a package current account you don't make the most of, earning a rubbish rate on your savings, racking up overdraft fees or being charged the earth on your credit card spending, it's more than likely that you're paying your bank in some way or another. The good news is for the most part you don't need to; all it takes is a bit of rejigging and you'll never need to give your bank another penny.
4. Clear my debts
It's easier said than done but getting serious about clearing your debts is a must for healthier finances. Start by writing a list of how much you owe and to who and find out how much you're paying in interest on each. Look at whether you should use your savings to pay off your debts or if you could make any of your debts cheaper by switching to a better deal (for example a current account with an interest free overdraft, a credit card with a low, or no-interest offer on balance transfers). Then look at prioritising your debts so that you focus on clearing your most expensive debt first and then work down your list. If you're seriously struggling with your debts then the most important thing for you to do is to get help.
5. Sort my savings
If you've been more of a spender than a saver then it's time to reinvent your ways and start stashing away the pennies. It's always a good idea to have an emergency fund sitting in the bank just in case you need to fork out for an unexpected expense. However, saving is also a great way to cut the cost almost everything you spend money on as banks, building societies, retailers and most other service providers will charge you extra when you pay for something in installments rather than in one lump sum.
If you're already in the savings habit that's great, but don't rest on your laurels. If you haven't checked what your savings are earning for a while it's quite possible that they're actually losing you money. So to make sure that your savings are earning what they should it's important you review them regularly to make sure that they're earning the best rate possible and you're not paying a penny more tax on your interest than you need to.
6. Streamline my insurance
No one likes spending money on insurance so it's even more important that any policy you pay out for is good value for money. Remember that this doesn't necessarily mean that the cheapest policy will be the best as insurance is only worth the cost if it will pay out when you need it to.
To work out whether an insurance policy is worth spending money on you'll need to think about whether you actually need it, whether it covers you for the things you're most likely to claim for and finally whether it covers you for things you don't need. If the insurance policies you have in place come up wanting then shop around for a better deal so that you find a policy that gives you the cover you need for the best price possible.
7.Think forward
When you're sorting your finances it'll pay to look to the future too. Financially, times are still uncertain so it's a good idea to think about how you would cope if your job prospects became uncertain. Also, you do need to think about how your nearest and dearest would cope without you, morbid as it seems. So if you haven't done so already it's a good idea to look at sorting out some life insurance and either making a will or reviewing your existing will if your circumstances have changed.
8.Shop around
From financial products to new purchases, shopping around for anything and everything you spend money on is the easiest way to make your money go further. So before you pay out - be it for a new insurance policy, a new TV, your gas bill or your groceries - decide exactly what it is you need, then shop around until you find a service provider or retailer that gives you the best price without compromising on what you'll get in return.
