The start of a new year is a great opportunity to make positive financial changes, particularly during the cost-of-living crisis. 49% of Brits making a New Year’s resolution have decided to save more money this year. This is an excellent idea for a New Year’s resolution, as it can improve your life and provide peace of mind. This post will look at how you can develop a practical approach to financial health in 2024.
Set Clear Goals
First, you need to have a clear goal or a few goals to work towards. This could include saving a certain amount by the end of the year, building an emergency fund, paying off debt, or you might have a specific purchase that you want to save for. If you have outstanding debts, you should focus on paying off your high-interest debt first, as this will help you save and make it easier to achieve your goals.
Create a Budget
A budget helps you to control your spending each month and understand your financial situation. The 50/30/20 rule is a popular form of budget, seeing 50% of your income going towards essentials spending (rent/mortgage, bills, etc), 30% towards non-essential spending (clothes, nights out, etc), and the remaining 20% going towards savings/debt clearance.
Create an Emergency Fund
Life can be unpredictable, so having an emergency fund of 3-6 months’ worth of living expenses is invaluable and can provide peace of mind. You can use the money in this fund if you face an unexpected cost or if you or your partner lose your job, for example. Setting up automatic transfers to an easy-access account will make it easy to build this fund.
Cut Unnecessary Expenses
Making more money is not always easy or even possible, so often, the best way to save is to cut unnecessary expenses. There are always ways to cut back, such as eliminating a luxury product from your shopping or buying supermarket own-brand goods. People often spend a significant amount of their monthly budget on car costs, so this is also a good area to address. You could make savings by only insuring your car when you need it with temporary car insurance if you do not use your car frequently.
Finally, it is important to celebrate milestones along the way. You do not want to make yourself miserable over the year by not enjoying your money, so be sure to treat yourself when you reach certain savings milestones.
Hopefully, this post will inspire you to make positive changes and create a healthier financial position in 2024. The beginning of the year is a great opportunity to make positive changes in life, and many other Brits will be looking to improve their financial well-being this year to combat the cost of living crisis.