3 common financial New Year’s resolutions and how to un-break them
Some people love New Year’s resolutions. It gives them focus, energy, and something to work towards throughout the year.
Other people hate them. They find them overbearing, stressful, and ultimately demotivating when they inevitably fall short of the high standard they’ve set for themselves.
Which side of the dividing line you fall under probably depends on the answer to this question: How are you getting on with your resolutions now we’re midway through January?
If you’ve fallen off the wagon, don’t worry – it happens to the best of us. In this blog, we’ll run through three of the most common financial New Year’s resolutions we set for ourselves, and how you can get back on track if you’ve broken them already.
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Broken resolution: Sticking to a budget
It’s rule number one when it comes to financial New Year’s resolutions. Most of us go into the New Year with goals we set for ourselves, and one of the most common is sticking to a strict budget.
You put some thought into making this resolution a new reality, so you sit down and work out what you earn in a month and take away what you spend on essential outgoings – like food, rent, and other bills.
Then you work out what you spend on non-essentials, whether it’s a gym membership you never use, or a habit for expensive clothes you can’t quite kick. This is where you can make some cost savings, so you strip your budget back to the minimum you think you can comfortably live on.
So far so good, but now that it’s well into January, you’ve had a couple of slip-ups. First you agree to go for a working lunch with a colleague that begs you, then your quiet weekend in ends up with you heading out to the pub, and before you know it, your budget is shot to bits.
How to get back on track:
You may be able to trust yourself when it comes to setting a budget, but sticking to it is another matter. We’re only human, which means we make mistakes. That’s why it can be useful to lean on technology to help you stick to your budget.
There are several online budgeting tools that can assist you in being strict with your finances. Monzo, one of the world’s fastest growing banks, has an app with functions that make it simple for you to stick to your budget.
The app allows you to set up pots of money for different things. That means you can set up separate pots for your bills, your mortgage payment, and even your socialising. You can even lock pots to make sure you don’t fall victim to temptation.
Every penny you spend will be flagged to you with a push notification, and the app will notify you of how much you have to spend in each pot, as well as how many days that money will need to last you – so if you’re at risk of going over budget, you’ll know, and can adjust your spending accordingly.
Broken resolution: Saving more
If the number one financial New Year’s resolution is budgeting (AKA spending less), then the number two financial New Year’s resolution is saving more.
It makes sense when you think about it. If you’re going to put all that work into keeping some money in your bank account at the end of each month, then you want to make sure you’re going to do something big with it.
You might have plans to save up for the trip of a lifetime, to get yourself on the property ladder, or even just to put some away for a rainy day, and every month of the New Year you plan on getting closer to that overarching goal.
That’s until your boiler breaks down, you get in an accident in your new car, or you ‘accidentally’ go out every weekend for a month. Soon enough you’re back in your overdraft, and that trip to Hawaii seems further away than ever.
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How to get back on track:
If you miss your savings goals from time to time, it’s important not to be too down on yourself. No matter how determined we are to save, sometimes life gets in the way. That’s why you’ll need a two-pronged approach to get your savings resolution back on track.
First, if you don’t already have one, you should make sure you build up some emergency savings. This money should amount to around two-to-three months’ pay if possible, and should be touched unless there’s an emergency (like the car accident we mentioned before).
Next, another word from our old friend technology. There are a lot of banks out there, like Starling, that can help you automate your savings. Once you create an account, you’ll be able to set a savings goal and make sure a certain amount of money is taken from your main account and sent straight to your savings account each month.
Even better, Starling can help you automate your savings through rounding up. If you choose this setting, anything you spend on your Starlin card will be rounded up to the nearest pound, with the change sent to your savings account – so if you spend £26.32, for example, the remaining 68p will go to your savings. This allows you to build up your savings over time without even trying.
Broken resolution: Spending less on socialising
You enjoyed yourself over Christmas and New Year – possibly a little too much. You were reunited with family members you hadn’t seen in ages, signed off from work with Christmas drinks, or maybe even spent a few nights in a hotel to get away from things for a while.
These activities are great fun, and well-deserved at the end of the year, but they’re not cheap. You realise there’s an easy fix – you’re going to cut down on what you spend on eating out and socialising with friends in 2022.
Then the first invitation to go out for a meal arrives. It’s January, you’re back at work with a lot of catching up to do, and the nights are drawing in. So you accept. And now you’re looking at your bank account and wondering what happened.
How to get back on track:
Luckily, there’s a simple trick to help you get back on track if you’re aiming to spend less on eating out – cut your budget for socialising in half.
This might sound too good to be true but it works, and here’s why. By cutting your budget in half, you’re setting yourself a strict budget with which to go out and enjoy yourself, but you’re not depriving yourself entirely. If there’s a social event in January you just can’t miss, then you can prioritise it.
That said, you will be saving half of the money you usually spend on these events. That can be used however you like, but it might be a good idea to use at least some of it on the meals and drinks you enjoy at home – the more you treat yourself when dining in, the less tempted you’ll be to break your budget and head out.