8 January 2016
Top tips for constructive financial planning in 2016
New Year actually presents the perfect time to take stock of our finances as a whole and make positive changes for the year ahead. Here, Kate Murray, Principality Building Society’s Lead Savings Products Manager, shares her top tips for constructive financial planning in 2016.
By now, many of us will have already set our New Year’s resolutions for 2016 – to join a gym, quit smoking, travel to a new destination or, for a lot of people, save money. Whether it’s saving for that dream home or committing to regularly putting money aside for a rainy day, January really is an ideal time to set a financial plan for the year ahead. While it might not mean a quick fix on your bank account now, it will pay off in the long run and set the precedent for good financial practice in the future.
Set a monthly budget
It might seem like ABC stuff, but setting a monthly budget is the basis for a healthy bank account. An effective way to do this is to take note of every single bill that is expected to come out of your account, from mortgage or rent payments, to your phone contract or your TV license. From this you can set aside how much disposable income you need until your next pay cheque - and then work out how much you are realistically able to save. However, be prepared to live off less disposable income should you have to; you never know what unexpected costs might be around the corner.
Get to know your bank statements, and read them when they arrive!
Familiarising yourself with your spending habits is key to managing your money, and spotting what you could feasibly cut back on. But how often do you regularly look at your bank statement? It’s important to make this a priority to stay on top of your outgoings, especially if you have several direct debits set up. Are you signed up to something you no longer wish to be paying for? If so, now is the time to cancel those payments and save yourself some money. In the same vein, regular statement check-ups will mean you can spot any incorrect payments being taken from your account.
As a start, setting a simple financial target for the entire year is a great way to ensure you stay on track with regular saving. This could be for a large expenditure like a house deposit, or something smaller such as a weekend away, it could even just be putting money aside to generally build up your savings and put you in a secure position for the future. It doesn’t matter how big or small the target, just as long as you keep to the regular payments each month. Start off by reviewing your monthly expenditures to work out how much you could afford to put away each month, however, make sure your goals are realistic and won’t leave you short until your next pay cheque.
The start of the year is a good time to review the bank accounts you currently have, particularly when it comes to savings accounts. Spend some time comparing the different products on the market, along with their interest rates, to see if you could bag yourself a better deal than the one you are currently on. Comparison websites are always a good place to start as they will help you compare the products that are out there. If you don’t already have one in place, consider setting up an ISA account as a way to make the most of your savings tax free.
Keeping your finances in shape in 2016 doesn’t have to be hard. More often than not, actually putting the structures in place, such as your monthly budget, are the biggest obstacles to overcome. Once these good habits are set, you’ll find yourself on top of your finances quicker than you might expect. So whether you’re setting a resolution to be on top of your finances this year or not, starting 2016 with proactive management of your bank accounts will put you in good stead for a prosperous year ahead.